The Income Tax Department has enabled electronic filing of Form 1 under the Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026.The Scheme provides a limited opportunity for eligible taxpayers to disclose certain foreign income or foreign assets that were either not reported or omitted from the relevant schedules of their Indian income-tax returns.The deadline for submitting a declaration is 31 December 2026.
The Scheme may be particularly relevant to individuals who:
For former UAE residents, this may include:
However, holding a foreign asset does not automatically mean that a default has occurred.
This category broadly covers eligible foreign income or foreign assets that were not previously disclosed.The aggregate value of the foreign income and assets covered under this category must not exceed ₹1 crore.
The amount payable is:
The effective amount payable is therefore 60% of the value determined under the Scheme.
This category may cover foreign assets:
but which were not reported in the relevant foreign-assets schedule when reporting became applicable.The aggregate value of assets under this category must not exceed ₹5 crore.
The prescribed fee is ₹1 lakh.
This distinction is critical. A genuine reporting omission involving an explained asset should not automatically be treated in the same manner as undisclosed foreign income.
The Scheme prescribes separate valuation methods for bank accounts, listed and unlisted securities, immovable property, partnership interests and other assets.For example, a foreign bank account may not simply be valued using its closing balance. The prescribed method broadly considers deposits into the account, subject to specified adjustments. A proper transaction-level review may therefore be required.
No.A person should not file a declaration merely because they currently hold an overseas bank account, company interest or investment.Schedule FA reporting generally depends on the individual’s Indian residential status for the relevant year. A person who was a non-resident or RNOR may not have had the same foreign-asset reporting obligation as an ordinarily resident taxpayer.Before considering a declaration, the following should be established:
Filing without completing this analysis may result in an incorrect admission, incorrect valuation or unnecessary payment.
Returning Indians and former NRIs should consider undertaking a structured review covering:
The objective is not to file under the Scheme in every case. The objective is to identify whether a reporting obligation existed, whether a default occurred and whether the Scheme is the correct remedy.
RVG can assist with:
The filing deadline is 31 December 2026, but taxpayers should not wait until December. Foreign bank, brokerage, company-ownership and property records can take significant time to collect and reconcile.
Legal reference: Foreign Assets of Small Taxpayers – Disclosure Scheme Rules, 2026, notified through CBDT Notification No. 114/2026.
(This article provides general information and should not be treated as legal or tax advice. Eligibility and reporting obligations must be evaluated based on the taxpayer’s specific facts and residential status.)
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