In a significant move aimed at easing compliance burdens, the government has proposed a time-bound disclosure scheme under the Finance Bill, 2026, allowing taxpayers to voluntarily declare undisclosed foreign assets and income. The initiative seeks to address long-pending reporting gaps under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
The Black Money Act was originally introduced to curb unreported foreign income and offshore assets held by Indian residents. In 2015, the government had opened a one-time compliance window between July 1 and September 30, permitting taxpayers to declare foreign assets acquired up to March 31, 2015, upon payment of prescribed tax and penalties.
Despite these efforts, non-compliance has persisted over the years — particularly among small taxpayers such as students, young professionals, technology employees, relocated NRIs and others. In many cases, the lapses were not deliberate but stemmed from lack of awareness or technical non-reporting.
Why Many Taxpayers Landed in Trouble
Several common situations have contributed to reporting gaps. These include foreign assets arising from employment-related benefits such as Employee Stock Option Plans (ESOPs) or Restricted Stock Units (RSUs), low-value or dormant bank accounts opened during overseas education, insurance or savings products purchased while living abroad, and assets inadvertently retained after temporary foreign assignments.
Additionally, data received under the Automatic Exchange of Information (AEOI) framework has revealed substantial mismatches between foreign financial information and disclosures made by PAN holders in India. These findings underscored the need for a practical mechanism enabling taxpayers to correct past mistakes without facing immediate prosecution.
What The New Disclosure Scheme Proposes
To address these legacy issues and promote voluntary compliance, the government has proposed a structured, time-bound disclosure scheme for foreign assets and foreign-sourced income.
Under the proposed framework, taxpayers will be permitted to declare undisclosed foreign assets and income upon payment of applicable taxes or prescribed fees, depending on the nature and source of acquisition. In return, declarants will receive limited relief from penalty and prosecution under the Black Money Act for matters properly disclosed.
However, the scheme will not extend relief to cases involving ongoing prosecution or assets representing proceeds of crime, ensuring that enforcement integrity remains intact.
Payment Structure Under The Proposed Scheme
The scheme outlines two broad categories of cases:
1. Undisclosed Foreign Assets or Income (Up to ₹1 Crore)
Where the aggregate value of undisclosed foreign assets and foreign income does not exceed ₹1 crore, the amount payable will include:
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Tax at 30% of the value of the undisclosed foreign asset as on March 31, 2026
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Tax at 30% of the undisclosed foreign income
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A penalty equal to 100% of the tax determined above
This effectively means the taxpayer would pay tax plus an equivalent penalty amount.
2. Certain Non-Reported Assets (Up to ₹5 Crore)
In cases where:
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The asset was acquired from income earned outside India during a period when the individual was a non-resident but was not disclosed upon becoming resident; or
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The asset was acquired from income already offered to tax under the Income-tax Act, 1961 but was not disclosed in the relevant schedule of the income tax return;
A fixed fee of ₹1 lakh will be payable, provided the value of such foreign asset does not exceed ₹5 crore.
Who Stands To Benefit
The scheme is expected to particularly benefit individuals who inadvertently failed to disclose small foreign holdings, such as overseas bank accounts from student years, foreign ESOP shares, or minor savings and insurance products purchased while working abroad.
By offering a structured opportunity to regularize past omissions, the government aims to reduce litigation, improve voluntary compliance, and foster a fairer and more transparent tax ecosystem.
| Sr. No. | Type of assets or income | Amount payable | Conditions |
| 1. | (a) Undisclosed asset located outside India; or (b) undisclosed foreign income. | Aggregate of,– (i) tax at the rate of 30% of the value of the undisclosed asset located outside India as on the 31st March, 2026; (ii) tax at the rate of 30% of the undisclosed foreign income; and (iii) an amount equal to 100% of tax determined in clauses (i) and (ii). | The aggregate value of the undisclosed asset located outside India and the undisclosed foreign income does not exceed Rs. 1 crore. |
| 2. | (a) Asset located outside India acquired from income accruing or arising outside India, by an assessee, during the period in which such assessee was a non-resident, but such assets were not declared by him in the relevant Schedule in the return of income on becoming a resident; or (b) asset located outside India acquired from income which has been offered to tax under the Income-tax Act, 1961 (43 of 1961) by the assessee, but such assets were not declared by him in the relevant Schedule in the income. | A fee of one lakh rupees. | The value of the asset located outside India does not exceed Rs. 5 crores. |
Implementation Timeline
The proposed disclosure window will be introduced through the Finance Bill, 2026, and will come into effect from a date to be notified by the Central Government. In her Budget speech, the Finance Minister indicated that this would be a one-time six-month foreign asset disclosure scheme.
With increasing global data sharing and stricter enforcement under international tax cooperation frameworks, the upcoming window could provide a crucial opportunity for taxpayers to come clean and avoid harsher consequences later.