FAST-DS 2026: Forgot to report a dormant foreign bank account? Here’s how the new disclosure window works

For Indians who returned home after working or studying abroad, an old overseas bank account can be easy to overlook. But once a person becomes a resident of India, certain foreign assets have to be reported in the income tax return. The government has now opened a one-time window for eligible taxpayers to disclose such assets and seek immunity from penalties and prosecution under the Black Money Act.

The Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS), 2026 came into effect on 16 August and allows eligible taxpayers to make declarations until 31 December 2026. The scheme covers specified undisclosed foreign assets and income, as well as some foreign assets that were acquired legitimately but were not reported in the relevant tax-return schedule.

The opportunity is particularly relevant for people who retain overseas bank accounts, investments or other assets after returning to India. The Income Tax Department has also made foreign asset information received through international reporting arrangements available in the Annual Information Statement, making it easier for taxpayers to identify information that may need attention.

An old foreign account does not become irrelevant because it is dormant

A foreign bank account may have been opened years ago to receive salary, scholarship payments or meet expenses while living overseas. If it remained open after the taxpayer returned to India, its reporting requirement needs to be examined based on the person’s residential status and the nature and source of the funds.

Foreign assets are generally reported through Schedule FA in the applicable income tax return. The reporting obligation is distinct from whether the account earned interest or had transactions during the relevant year. The Income Tax Department’s guidance on Schedule FA specifically highlights the need for taxpayers with foreign assets to use the appropriate return forms.

The Black Money Act can impose a ₹10 lakh penalty for failure to furnish details of a foreign asset or for furnishing inaccurate particulars, subject to statutory exceptions and thresholds. This makes an apparently insignificant old account worth reviewing rather than ignoring.

FAST-DS, however, does not treat every unreported foreign asset in the same way.

₹1 crore and ₹5 crore limits have different meanings

The scheme broadly creates two routes.

The first covers an undisclosed foreign asset or undisclosed foreign income that was not offered to tax. The aggregate value of the qualifying asset and income cannot exceed ₹1 crore. For such declarations, the taxpayer has to pay tax at 30% along with an additional amount equal to 100% of that tax. In effect, the combined payment works out to 60% of the amount covered by this category.

The second category is more relevant to a common situation involving returning Indians. It covers a foreign asset that was acquired from income that had already been offered to tax, or an asset acquired when the taxpayer was a non-resident but which was not reported after the person became resident in India. Here, the aggregate value of the qualifying foreign assets can be up to ₹5 crore and the prescribed payment is a flat ₹1 lakh fee.

This distinction matters. A taxpayer should not automatically assume that an omitted foreign bank account attracts the 60% payment. The source of the money, the taxpayer’s residential status when the asset was acquired and whether the relevant income was already taxed have to be established first.

For example, a person who accumulated savings from salary while working overseas as a non-resident and retained the money in a foreign account may fall into a very different category from someone holding an overseas account containing income that was never disclosed for Indian tax purposes.

Taxpayers should also examine the prescribed valuation methodology rather than simply looking at the account balance on 31 March 2026. Historical records may be important in establishing the value and source of the asset under the scheme.

A valid FAST-DS declaration, followed by the required payment, can provide immunity from further tax, penalty and prosecution under the Black Money Act in respect of the declared asset or income, subject to the conditions of the scheme.

For anyone who has an old overseas account or investment that was missed in past returns, the December 31 deadline therefore provides a limited opportunity to first establish what was held, how it was funded and whether it was previously taxed, before deciding whether FAST-DS is applicable.