Foreign Assets Disclosure Scheme (FADS) 2026: Online Filing, Eligibility, Tax and Last Date

If you have ever worked abroad, studied overseas, received foreign RSUs or ESOPs, or simply left an old bank account open in another country, this scheme may matter to you. The Income Tax Department has now enabled online filing for the scheme, and the clock is running.

This guide explains the scheme in plain language: who can use it, what it costs, how to file Form 1, what protection you get, and what to do before the deadline.

What is the Foreign Assets Disclosure Scheme (FADS 2026)?

The scheme was introduced through sections 130 to 144 of the Finance Act, 2026 and is supported by the Foreign Assets of Small Taxpayers Disclosure Scheme Rules, 2026 (CBDT Notification No. 114/2026, dated 14 August 2026). It came into force on 16 August 2026.

Many people use the shorter name FADS 2026, while the law and CBDT FAQs also use FAST-DS. Both refer to the same scheme. (Some social media posts write it as “Foreign Assets or Small Taxpayers”; the correct wording is “Foreign Assets of Small Taxpayers.”)

In simple terms, the scheme gives eligible taxpayers a single opportunity to bring old foreign-asset and foreign-income omissions into the open, pay a defined amount, and receive specified protection under the Black Money Act.

Key facts at a glance

Who can file under FADS 2026?

Eligibility is wider than “someone who is a resident today.” Broadly, the scheme covers a person who was resident in India in the relevant year. A person who is now a non-resident (NRI) or RNOR can still be eligible if they were resident in India in the year the foreign income arose or the year the foreign asset was acquired.

A declaration can be considered where you:

• did not file a return at all;
• filed a return but did not disclose the foreign asset or income; or
• had the asset or income escape assessment.

Two categories: how much will you pay?

This is the most important part of the scheme. The cost depends on which of the two categories your case falls into.

Example: Category 1

Suppose an undisclosed foreign bank account has a scheme value of ₹60 lakh and unreported foreign income is ₹20 lakh. The combined base is ₹80 lakh. Tax at 30% is ₹24 lakh, the equal additional amount is another ₹24 lakh, and the total payable is ₹48 lakh. The ₹1 crore ceiling is tested on the combined total, not item by item.

Category 2 is cheaper, but needs proof

The ₹1 lakh fee is low because the source of money is not in question. The problem is only that the asset was not reported in the return Schedule. You will still need evidence such as employment records, foreign tax returns, bank trails, purchase documents and Indian returns showing the income was already taxed.

What foreign assets and income can be declared?

• foreign bank, deposit, brokerage, custodian and e-wallet accounts;
• shares, RSUs, ESOPs, mutual funds, bonds and other securities;
• financial interest in a foreign company, LLP, partnership or other entity;
• foreign land, houses, commercial property, bullion, jewellery and other valuables;
• foreign insurance, annuity, pension and retirement arrangements;
• trust interests, beneficial interests and signing authority in a foreign account; and
• foreign interest, dividend, rent, salary, pension, capital gains and other taxable foreign income.

An account closed before 31 March 2026 should not be ignored without review, and an item should not be skipped just because it does not appear in your Annual Information Statement (AIS).

How foreign assets are valued

The valuation date is 31 March 2026. For many assets, the Rules look to the higher of cost and open-market value on that date, with specific methods for quoted shares, unquoted interests and immovable property. Values are converted into Indian rupees as prescribed.

For non-bank assets, CBDT FAQs indicate that a valuation difference of up to 20% will not, by itself, invalidate a declaration on specified misstatement grounds. Treat this as a safety margin, not as permission to estimate casually.

How to file Form 1 online, step by step

The whole process is electronic. Log in to the e-Filing portal and follow this path:

e-File → Income Tax Forms → File Income Tax Forms → Under Other Acts → Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (Form 1)

1. File Form 1. Complete the declaration and its Annexure. Add multiple assets or income items by repeating entries, and upload acquisition, source and valuation documents.
2. Receive Form 2. After verification, the prescribed authority issues Form 2 stating the amount payable, generally within one month from the end of the month in which Form 1 was filed.
3. Pay the amount. Payment is due within two months from the end of the month in which Form 2 is received. A further period of up to two months is available with simple interest at 1% for every month or part of a month of delay.
4. Report payment in Form 3. Submit proof of payment electronically within the permitted period.
5. Get Form 4. If everything matches, the authority issues Form 4 certifying payment, generally within one month from the end of the month in which Form 3 is received.

What protection do you get after a valid declaration?

Once the declaration is valid and the required amount is paid, you get immunity from further tax, penalty and prosecution under the Black Money Act for the declared asset or income relating to the year ended 31 March 2026 or earlier. The declared amount is also not included again in your total income under the Income-tax Act or the Black Money Act.

This protection is specific to the items you declare. It is not a clean chit for your entire financial history.

What the scheme does not cover

• It does not automatically settle FEMA, PMLA, company law, benami law or other independent legal exposure.
• It is not available for proceeds of crime where specified PMLA proceedings have been initiated or are pending.
• It is not available for an assessment year already completed under the Black Money Act.
• It does not replace your regular annual reporting. Resident taxpayers must still report foreign assets in Schedule FA and foreign income in Schedule FSI, with Schedule TR and Form 67 for foreign tax credit where applicable.
• Individuals with foreign assets generally cannot use ITR-1 or ITR-4, which do not contain Schedule FA.

What if you do nothing?

If a genuine default remains unresolved after the window closes, the special immunity is lost and the ordinary law applies. Depending on the facts, that can mean tax on undisclosed foreign income or assets, penalties under the Black Money Act, and prosecution for wilful default. An updated or revised return may not give the same immunity, so choose your route carefully.

Pre-filing checklist

• Map your residential status (NR, RNOR, ROR) for every relevant year.
• List every foreign account, asset, income source and signing authority, including closed accounts.
• Trace the source of money for each asset and collect bank trails, employment records and foreign tax returns.
• Compare your list with Schedules FA, FSI and TR in earlier returns.
• Classify each item under Category 1, Category 2 or outside the scheme, then test the ceilings.
• Compute values as at 31 March 2026 and get valuation support where needed.
• Check for pending or completed proceedings that could make you ineligible.
• Consult a qualified Chartered Accountant before submitting Form 1.

Frequently asked questions

Official source: Income Tax e-Filing Portal. Details are based on the Finance Act, 2026, the notified FADS Rules and CBDT FAQs available at the time of writing (October 2026).

Disclaimer: This article is for general information only and is not legal, tax or financial advice. Rules, forms and timelines may change. Please consult a qualified Chartered Accountant or tax professional before filing any declaration.