Undisclosed foreign Esops? Settle now with ₹1 lakh penalty under new scheme

Subscribe to enjoy similar stories. In a major relief to taxpayers holding foreign assets, Budget 2026 proposed a one-time, six-month window for taxpayers to voluntarily declare any undisclosed foreign assets or foreign-sourced income and get amnesty from prosecution under the black money Act. Under tax laws, all foreign assets must be disclosed annually in the FA Schedule of ITR-2 or ITR-3, even if they generate no income.

Failure to report, even when there is no tax to pay, can attract a ₹10 lakh annual penalty and up to seven years imprisonment under the Act.

The budget has introduced a one‑time, six-month Foreign Assets of Small Taxpayers—Disclosure Scheme, 2026 (FAST-DS) that allows taxpayers to disclose foreign assets from any past years. But this relief is no free lunch, as taxpayers will be required to pay additional taxes and penalties, albeit lower than those slapped under black money Act. The government is yet to announce when the six-month timeline starts.

The relief is extended to two categories of taxpayers. Category A includes those who have not disclosed foreign income or even assets that may not have generated any income. In such cases, the value of the assets eligible for amnesty should not exceed ₹1 crore, said Neeraj Agarwala, partner, Nangia & Co.

LLP.
Category A taxpayers need to pay 30% of the asset’s fair market value (FMV) or 30% of undisclosed income as tax, plus an additional 30% tax, and get immunity from proceedings under the black money Act. Parizad Sirwalla, partner and head, Global Mobility Services-Tax, KPMG in India, explained that the second 30% additional tax is essentially the first tax paid twice, in lieu of a penalty, making the total outgo 60% of the asset’s FMV or the undisclosed