FAST-DS 2026: Regularising Foreign Assets and Income

Most people who need FAST-DS did not set out to hide anything. A brokerage account opened when RSUs first vested. Shares subscribed in a Hong Kong company a decade ago that never paid a rupee of dividend. A salary account left behind after a posting abroad. None of it felt like a foreign asset at the time, and none of it reached Schedule FA. The exposure under the Black Money Act, however, does not turn on intention.

FAST-DS is a one-time statutory window to close that gap. It is open now and it closes on 31 December 2026. What follows is a practical guide to using it — and to its limits, which are more significant than most summaries suggest. It draws on our work advising on cross-border regulatory and tax exposure.

The scheme is notified and running

The Central Government notified the Foreign Assets of Small Taxpayers-Disclosure Scheme Rules, 2026 through Notification No. 114/2026 dated 14 August 2026, issued under section 143 of the Finance Act, 2026. The Rules came into force on 16 August 2026. This is no longer a Budget proposal.

• Legal basis — Chapter IV, sections 130 to 144 of the Finance Act, 2026
• Scheme commenced — 16 August 2026
• Last date for Form 1 — 31 December 2026, with no declaration possible after that date
• Valuation date — 31 March 2026, regardless of when the declaration is filed
• Filing mode — electronic, in Form 1
• Administering authority — the Principal Director General or Director General of Income-tax (Systems)

Treat the December date as the end of the process, not the start of it. Source documents from a bank that closed an account six years ago, or a valuation of unquoted foreign shares, are not weekend work. In practice the evidence file, not the portal, is the critical path.

Start with residential status, not with the asset

The word "resident" carries different meanings across FAST-DS, Schedule FA and the Black Money Act, and applying one label to a taxpayer's whole history is the most common analytical error. The right starting point is a year-by-year status matrix.

• For an individual, the historical Schedule FA obligation is generally analysed for Resident and Ordinarily Resident years. Official guidance is that the Schedule need not be completed by an RNOR or a non-resident
• FAST-DS eligibility is wider than the reporting duty. In specified cases a person who is presently non-resident or RNOR may declare an item relating to a year in which they were resident, or an asset acquired while resident
• A total income below ₹50 lakh does not switch off the foreign-asset disclosure requirement, and despite the scheme's name there is no ₹50 lakh income test in it. The statutory ceilings in section 133 are on the value of what is being declared, not on what the taxpayer earns
• The ITR form matters separately. A company director, or a holder of unlisted equity shares, ordinarily cannot use ITR-1 simply because income is modest

What can be declared

Under section 132, a declaration may relate to any previous year in which the taxpayer failed to furnish a return, filed a return before the scheme commenced but omitted the asset or income, or where the item escaped assessment. Form 1 accommodates repeated entries, so multiple assets and several years belong in one declaration rather than in several.

• A foreign bank or deposit account is a potential foreign asset, and its value is built from qualifying cumulative deposits rather than the closing balance
• Quoted or unquoted foreign shares are a foreign asset or financial interest even where no dividend was ever received
• ESOPs, RSUs and the brokerage or custodian account holding them should be mapped separately; an omitted dividend or capital gain is a distinct income issue
• Foreign immovable property may fall under either category, depending on source and prescribed valuation
• An interest in a foreign firm, AOP or LLP is valued by the prescribed allocation of net assets and rights
• Foreign salary, dividend, interest, rent or capital gains chargeable in India but never offered to tax is potential Category 1 income
• A bare directorship, on a professional view, is not itself a FAST-DS asset — though it still has to be reported in the applicable ITR
• Signing authority over a corporate account may attract Schedule FA reporting without making the account the individual's own asset

The two categories, and why classification decides everything

Section 133 splits declarations into two routes with very different economics. A genuine, explainable asset does not automatically qualify for the cheaper one — the statutory source condition has to be proved, not asserted.

Category 1 covers an undisclosed foreign asset whose source is unexplained or unsatisfactory, or foreign income that was chargeable to tax in India but never offered. The amount payable is tax at 30% of the prescribed value, plus an additional amount equal to 100% of that tax — an effective outflow of 60%. The aggregate value of Category 1 assets and income must not exceed ₹1 crore.

Category 2 covers a foreign asset acquired from income already offered to tax in India, or acquired from foreign income earned while the assessee was non-resident and then omitted from the relevant Schedule after becoming resident. The amount payable is a flat scheme fee of ₹1,00,000. The aggregate value of Category 2 foreign assets must not exceed ₹5 crore.

The gap between 60% of value and a flat ₹1 lakh is the whole ballgame, and it is decided by evidence. Category 2 is worded specifically for assets bought with income already taxed, or with qualifying non-resident-period foreign income. A gift, an inheritance, a loan, an exempt receipt or a capital receipt may be entirely genuine and still not satisfy that wording. Those cases need separate legal analysis before a category is chosen, not after.

Is the ₹1 lakh fee per year, per asset, or once?

This is the question we are asked most, usually by someone who has quietly multiplied ₹1 lakh by eight years and concluded the scheme is unaffordable. The notified architecture points the other way: one consolidated flat fee for a qualifying Category 2 declaration.

• The official FAQ describes the Category 2 amount as a flat fee of ₹1 lakh
• Form 1 allows the relevant asset entries to be repeated as required
• The categorised summary carries a single consolidated "Total fee payable" field, requiring Nil or ₹1 lakh for the Category 2 aggregate
• The authority determines and communicates the final amount in Form 2

So where the same foreign shareholding was omitted for six years and qualifies under Category 2, the structure points to ₹1,00,000 for the complete declaration — not ₹1,00,000 multiplied by six. The corollary matters just as much: because the fee is charged once on a complete declaration, everything must be in it. A mixed case can carry the Category 1 amount on separate income or assets alongside the Category 2 fee.

Valuation usually matters more than the current balance

Every threshold and payment conclusion should be reached after applying Rule 3, never before. Face value, paid-up capital, a bank's closing balance and the taxpayer's original remittance are frequently not the prescribed value, and the difference can move a case across a ceiling.

• Foreign bank account — the sum of deposits from the opening of the account up to 31 March 2026, excluding redeposits traceable to an earlier withdrawal from the same account. Where the account was previously declared under Chapter VI of the Black Money Act, only deposits from the date of that declaration count. This is emphatically not the closing balance, and for an account used actively over many years the prescribed value can be several times what is sitting in it today
• Quoted shares and securities — higher of acquisition cost and the prescribed market price average on 31 March 2026, using the nearest preceding traded date if there was no trading that day
• Unquoted equity shares — higher of acquisition cost and the value under the prescribed net-asset formula. If that valuation is not carried out, indexed cost of acquisition is deemed to be the value
• Other unquoted shares and securities — higher of acquisition cost and open-market value supported by a recognised foreign valuer; otherwise indexed cost
• Foreign immovable property — higher of acquisition cost and open-market value on 31 March 2026, supported by a recognised valuer; otherwise indexed cost
• Jewellery, bullion, art and similar assets — higher of cost and prescribed open-market value; otherwise indexed cost
• Interest in a foreign firm, AOP or LLP — the entity's net assets allocated first by capital contribution, then by dissolution or profit-sharing rights
• An asset sold before 31 March 2026 — generally the higher of cost and sale price; where transferred without or for inadequate consideration, cost is compared with value on the transfer date

Where sale proceeds or a bank withdrawal were reinvested into another asset, the Rules reduce the old asset or account value by the amount invested in the new one, so the same money is not counted twice. Currency conversion follows the prescribed RBI or central-bank reference-rate mechanism as at 31 March 2026.

For assets other than bank accounts, a variance of not more than 20% between the declared fair market value and the value later determined does not by itself invalidate the declaration for misrepresentation or suppression. That tolerance is a margin for honest valuation judgement. It is not cover for incomplete facts, and it does not extend to bank accounts at all.

Filing, payment and closure

• Diagnostic — build the year-wise residency and ITR matrix, identify every asset and income item, check for notices and exclusions, and classify each item under Category 1 or Category 2
• Evidence and valuation — collect acquisition and source documents, bank histories, foreign financial statements and valuation material, and reconcile reinvestments to avoid double counting
• Form 1 — file a complete electronic declaration on or before 31 December 2026, repeating asset and income entries as needed
• Form 2 — the authority communicates the amount payable, ordinarily within one month from the end of the month in which Form 1 was filed
• Payment — due within two months from the end of the month in which Form 2 is received. A further two months is available with simple interest at 1% per month or part month
• Form 3 — electronically intimate the payment, including interest where applicable, within the permitted payment period
• Form 4 — the authority issues the conclusive order certifying the declaration and payment, ordinarily within one month from the end of the month of the Form 3 intimation

The payment deadline is the unforgiving part. If the amount is not paid within the ordinary two-month period, or within the permitted additional two months with interest, the declaration is treated as void and deemed never to have been made. A taxpayer in that position has disclosed everything and received nothing — so the funding plan should be settled before Form 1 is filed, not after Form 2 arrives.

What the immunity covers, and what it does not

A valid declaration followed by timely payment gives immunity from further tax, penalty and prosecution under the Black Money Act in respect of the income or asset actually and correctly declared, for the previous year ending 31 March 2026 or an earlier year. The declared income or investment is not brought into total income again. Where an Income-tax or Black Money Act assessment concerning the declared item is pending, section 141 requires the Assessing Officer to take the declaration into account.

The boundaries deserve equal attention:

• The immunity extends only to what was actually declared, and declared correctly. It is not an amnesty for the taxpayer at large
• The scheme does not apply to an item relating to an assessment year for which Black Money Act assessment proceedings have already been completed
• It does not apply to proceeds of crime in respect of which specified proceedings under the Prevention of Money-Laundering Act have been initiated or are pending
• Payment cannot be claimed as a refund or set-off, and cannot be used to reopen, rectify or revise a completed assessment
• False material particulars, or breach of a scheme condition, can render the declaration invalid — treated as if never validly made
• There is no FEMA immunity whatsoever. Overseas investment, LRS, ODI, annual performance reporting, overseas loans and guarantees remain live and separate exposures, to be regularised through the designated AD bank and RBI process

That last point is the one most often missed. A resident individual who funded a foreign company can complete FAST-DS properly and still be sitting on an unresolved ODI position.

FAST-DS does not replace the current ITR

Disclosing an asset in this year's Schedule FA makes the current return accurate. It does not extinguish an earlier default, and it is not a substitute for the statutory declaration.

• If the current return has not been filed, file it correctly with all applicable Schedule FA, FSI and TR, directorship, unlisted-share and signing-authority particulars
• If a return furnished before 16 August 2026 omitted the asset, revise it where legally possible and consider FAST-DS for the historical item
• If a return furnished after 16 August 2026 still omitted the asset, revise promptly. Section 132 refers specifically to an omission in a return furnished before commencement of the scheme, so a fresh post-commencement omission should not be assumed to be protected

The separate ₹20 lakh Black Money Act relief

Sections 42 and 43 of the Black Money Act exclude the ₹10 lakh reporting penalties for foreign assets other than immovable property where their aggregate value does not exceed ₹20 lakh. Sections 49 and 50 carry corresponding prosecution carve-outs, with effect from 1 October 2024 for the prosecution amendments.

This is worth knowing before paying anything, because for a small, clean-source movable asset it can change the commercial answer. But it should not be confused with regularisation. The ₹20 lakh provisos do not correct an ITR, do not produce a closure certificate, do not prove the source of investment, do not cover omitted taxable foreign income, and do not touch FEMA. They may inform the decision whether formal FAST-DS closure is necessary — after the year-wise review, not instead of it.

Directorship, shareholding and signing authority

Foreign company involvement generates more confusion than any other fact pattern, largely because three separate things get treated as one.

• Director only, with no shares, beneficial rights, signing authority or income — report the directorship in the applicable ITR. On a professional view, FAST-DS should not be invoked for the office of director alone
• Director and shareholder or beneficial owner — the shareholding is a foreign asset and financial interest even if no salary, sitting fee or dividend was ever received
• Nominee or qualifying share — examine legal title, consideration, beneficiary rights and the foreign register of members. A nominal holding can still be a reportable asset
• Authority over a company bank account — Schedule FA signing-authority reporting may apply, but the corporate account is not automatically the individual's own asset
• A resident individual who funded a foreign company — review ODI, LRS, UIN, financial commitment and APR records separately

A foreign bank account funded from tax-paid salary

An ROR individual holds a foreign account with a balance of roughly USD 10,000. It was omitted from Schedule FA for several years, and no interest went unreported.

Category 2 may be available if the deposits can be traced to income already offered to tax. The declared value is the cumulative qualifying deposits, not the current balance — which is why an account that looks trivial today can carry a materially larger prescribed value. A single comprehensive Category 2 declaration is framed around one flat ₹1 lakh fee, not a fee for each omitted year. The ₹20 lakh Black Money Act relief should be examined before deciding whether formal closure is commercially necessary at all.

A foreign company subscribed with tax-paid money

An individual, ROR throughout, subscribed to shares in a Hong Kong company in 2016 with SGD 10,000 and has received no dividend, salary or sitting fee since. The shares never appeared in the Indian returns.

The absence of income does not remove the asset-reporting obligation. If the SGD 10,000 came from income already offered to tax, the shares may fall in Category 2. The unquoted shareholding must be valued under Rule 3, and the company's nominal capital or the face value of the shares is not the decisive figure — the prescribed value of this individual's actual holding is. Directorship, shareholding and any signing authority must also be addressed in the current ITR, and the ODI position needs its own review.

RSUs taxed as salary but missing from Schedule FA

RSUs vested, the perquisite was correctly included in taxable salary, and neither the resulting shares nor the brokerage account was disclosed.

This is the most common Category 2 pattern we see, and the cleanest, because the source is already documented in the payroll record. The custodian account and the shares should be mapped, valued and reported separately rather than as one line. Any dividends or sale gains omitted from Indian income are a distinct issue and may need Category 1 treatment in the same declaration.

Tax-paid shares, but the dividend was never offered

Foreign shares were bought from disclosed income, but dividends received in earlier years were never offered to tax in India.

The asset may qualify under Category 2 while the omitted dividend is potentially Category 1 foreign income. Form 1 permits repeated entries and separate aggregates precisely for this. The declaration should not collapse both issues into the ₹1 lakh category — a mixed declaration is the correct answer, not a problem to be engineered away.

An unpaid director with no financial interest

An individual is only a director of a foreign company — no shares, beneficial ownership, voting or profit rights, capital contribution, signing authority or remuneration.

The directorship should be reported in the applicable ITR. On a professional reading, a bare office of director is not by itself an asset or foreign income for FAST-DS, and the ₹1 lakh fee should not be paid solely for an omitted directorship. The current return must still be corrected, and the factual position — particularly the absence of any economic rights — should be documented while the evidence is available.

Readiness checklist

Before Form 1 is released, the file should hold a defensible answer to each of these:

• Year-wise residential status, distinguishing ROR, RNOR and non-resident years
• ITR acknowledgements, computations and Schedule FA, FSI and TR disclosures for every affected year
• A complete foreign-asset register: bank accounts, custodial accounts, shares, ESOPs and RSUs, property, trusts, signing authority, loans and other interests
• The source-of-funds trail from bank account to asset, linked to income already offered to tax or to the qualifying non-resident period
• Acquisition documents, share certificates, broker statements, remittance records, contracts and foreign tax statements
• Foreign-company financial statements and shareholder or director registers where unquoted shares or beneficial interests are involved
• Valuation working as at 31 March 2026, with recognised valuer reports where required
• A foreign-income reconciliation covering interest, dividends, salary, director fees, capital gains, rent and distributions
• A review of notices, enquiries, pending assessments, completed Black Money Act assessments and PMLA exclusions
• A current-year ITR correction plan, so the asset, directorship, signing authority and income are reported prospectively
• A separate FEMA, ODI, LRS and APR review for overseas companies, capital contributions, loans and guarantees
• A threshold and payment model covering Category 1, Category 2 and the ₹20 lakh movable-asset relief

How Alverian helps

FAST-DS is not a return-filing exercise. It is a coordinated tax, valuation, foreign-company and FEMA workstream running against a fixed deadline, and the parts that go wrong are usually the parts nobody owned.

• Eligibility and exposure diagnostic — the residency, ITR and asset-year matrix; exclusions, notices, and Category 1 or 2 classification
• Source and valuation file — tracing source of funds, reconciling foreign statements, and coordinating recognised foreign valuations and Rule 3 computations
• Declaration and payment — the Form 1 data pack, supporting annexures, threshold computation, Form 2 review and Form 3 payment intimation
• Current ITR correction — aligning Schedule FA, FSI and TR, directorship, unlisted-share and signing-authority disclosures with the FAST-DS record
• FEMA and ODI coordination — working with the designated AD bank and relevant specialists on ODI, UIN, APR, late submission fee or compounding analysis

India-side execution runs through our partnership with R. K. Chari & Co., Chartered Accountants, so the regulatory and tax position and the filings sit inside one engagement. If a review would help, the first step is small: a year-wise residency matrix and an honest list of every foreign account, holding and office. Most of the difficult questions answer themselves once that exists.

This note reflects the position as at 25 August 2026 and is general information rather than advice on a particular taxpayer's facts, residential status, source of investment, valuations, ITR history or proceedings. Laws, forms, portal processes and administrative practices may change, and the scheme should be applied from the statute, the Rules, the official forms and departmental guidance rather than from any summary.