Forgotten Foreign Bank Account? ₹ 5 Lakh Shares? A New Tax Window Has Opened!
A former student who returned to India years ago called me last week:
“Sir, I worked in the UK back in 2015. I still have a dormant bank account there with around £ 2,000. I never reported it in my Indian tax return. Is it really a problem?”
Another question followed. A senior corporate executive asked:
“I received RSUs worth ₹5 lakh while working abroad. I paid full tax on that salary, but I never filled out Schedule FA in my Indian return. Is that also treated as Black Money?”
These sound like small, innocent oversights. However, under India’s stringent Black Money law, the taxman historically made little distinction between a hidden Swiss vault and a forgotten £2,000 student account.
The good news is that the Government has now opened a one-time compliance opportunity-the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS 2026). The scheme commenced on 16 August 2026, and the last date for filing the declaration is 31 December 2026. Form 1 is available electronically on the Income Tax e-filing portal.
Why Was Such a Scheme Needed?
The Black Money law was introduced to deal with undisclosed foreign income and assets. However, every foreign-asset non-disclosure may not involve deliberate tax evasion. A former student may have left behind a small foreign bank account. An employee may have received ESOPs or RSUs from a foreign employer. A person returning to India may continue to hold an overseas savings account or insurance policy with the intention of returning back after a few years. The Government has recognised such legacy and inadvertent cases and has provided eligible taxpayers a limited opportunity to regularize specified foreign assets and income.
Two Situations-Two Different Treatments
This is the most important part of the scheme.
First category: where the taxpayer has undisclosed foreign income or an undisclosed foreign asset. The aggregate value of the undisclosed foreign asset and undisclosed foreign income covered by this category must not exceed ₹1 crore, with the foreign asset valued as on 31 March 2026. The taxpayer is required to pay tax at 30%, together with an additional amount equal to 100% of such tax. In the case of an undisclosed foreign asset, this effectively works out to 60% of its value.
Second category: where the foreign asset was acquired while the taxpayer was a non-resident, or was acquired from income already offered to tax in India, but the asset was not disclosed in the relevant foreign-asset schedule. Here, the treatment is more favourable. The value of the eligible foreign asset can be up to ₹5 crore as on 31 March 2026, and the taxpayer can regularize the omission by paying a fee of ₹1 lakh.
Therefore, the first question should not be merely “How much is my foreign asset worth?” It should be: “How and when was the asset acquired?”
Let Us Take an Example.
Suppose Mr. A worked in the United States and received shares of his foreign employer worth ₹5 lakh. He returned to India and became a resident. The shares were acquired while he was a non-resident. After becoming resident, he failed to disclose the shares in the applicable Schedule FA of his Indian tax return. If the conditions of the scheme are satisfied, this may fall into the second category. The asset value can be up to ₹5 crore and the prescribed fee is ₹1 lakh.
Now consider Mr. B, who was resident in India and earned ₹40 lakh which he never disclosed. He used that undisclosed income to acquire foreign shares worth ₹40 lakh. This is fundamentally different. The foreign asset represents undisclosed income and would fall under the first category, subject to the scheme’s conditions. Thus, the source of the asset can be more important than its size.
What about a Forgotten Foreign Bank Account?
This could be particularly relevant to ordinary taxpayers. Imagine someone who worked in the UK or USA 15 years ago. Before returning to India, he closed his main bank account but inadvertently left another savings account with ₹2 lakh. The account was practically forgotten.
The amount may be small, but the foreign-asset reporting obligation does not automatically disappear because the balance is small. Similarly, taxpayers may have forgotten foreign shares, insurance policies, ESOPs, RSUs or other overseas financial assets. The new window is therefore not merely about large foreign bank accounts. It may also be relevant to the small overseas asset quietly sitting in an old account.
One Asset-One Fee
There is another useful feature. Where the same foreign asset remained undisclosed for several years, the ₹1 lakh fee is not necessarily payable separately for every year. The CBDT FAQs clarify that, for the same asset, the fee is payable only once, in respect of the first year of non-disclosure.
The TAX Talk
Sometimes, the biggest tax problem is not the asset we know about-it is the asset we have forgotten about. FAST-DS 2026 provides eligible taxpayers a one-time opportunity to clean up certain legacy foreign-asset and foreign-income disclosures. The scheme opened on 16 August 2026 and closes on 31 December 2026. Do not miss the deadline-it will not remain open forever.
The declaration is to be filed electronically in Form 1 through the Income Tax e-filing portal: e-File → Income Tax Forms → File Income Tax Forms → Other Acts → Foreign Assets of Small Taxpayers Disclosure Scheme, 2026. A valid declaration, subject to fulfillment of the prescribed conditions and payment, also provides specified immunity from further tax, penalty and prosecution under the Black Money Act in respect of the matters covered by the declaration.
