Amnesty on hidden foreign assets in Budget 2026
In a bid to resolve long-pending cases of inadvertent overseas asset non-disclosures and to encourage voluntary compliance, the Budget has proposed a fresh amnesty window for small taxpayers, alongside a relaxation of prosecution norms under the Black Money law.Under the proposed Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026 (FAST-DS 2026), resident taxpayers will get a time-bound opportunity to declare undisclosed foreign income and assets, nearly a decade after the one-time compliance window offered in 2015. According to the explanatory memorandum, non-compliance continues to persist, especially in legacy cases involving ESOPs from overseas employment, dormant foreign bank accounts of former students, insurance or savings of returning non-residents, and assets held during overseas deputations.
The scheme introduces a graded framework. Taxpayers who neither disclosed foreign income nor assets earlier — with aggregate undisclosed income or asset value up to Rs 1 crore — will be required to pay 30% tax on the fair market value or undisclosed income, along with an additional 30% levy in lieu of penalty, in exchange for immunity from prosecution.A second category covers cases where income was disclosed or tax paid but the foreign asset itself was not declared. For such taxpayers, immunity from both penalty and prosecution will be available on payment of a flat Rs 1 lakh fee, provided the asset value does not exceed Rs 5 crore.Sandeep Bhalla, partner at Dhruva Advisors, said, “The amnesty is a bit half-hearted. There is no reason for a limit of Rs 5 crore in a case where either the Indian tax is paid in full or the asset was earned during non-residency of the taxpayer. In both cases, such foreign income or asset would not be taxable in India in any case. Similarly, even in cases where tax of 30% plus penalty of 30% is being collected, there was no reason to limit such disclosures to Rs 1 crore. There is a need for foreign exchange to come in and become part of the system.”Separately, the govt has also proposed easing prosecution provisions under the Black Money Act for minor non-disclosures. Residents will no longer face criminal action for foreign assets (other than immovable property) where the aggregate value does not exceed Rs 20 lakh. This change will apply retrospectively from Oct 1, 2024.
