Amnesty for hidden foreign assets in the 2026 budget
In a bid to resolve long-pending issues of inadvertent non-disclosure of offshore assets and encourage voluntary compliance, the Budget proposed a new amnesty window for small taxpayers, along with relaxing norms for prosecution under the Black Money Act.Under the Foreign Assets Disclosure Scheme for Small Taxpayers – 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 introduced in 2015. According to the Explanatory Memorandum, non-compliance continues, particularly in legacy cases involving offshore employment plans and dormant foreign bank accounts of former employees. Students, insurance or savings of non-resident returnees, and assets held during deployment abroad.
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The chart provides a tiered framework. Taxpayers who have not disclosed foreign income or assets earlier – with total undisclosed income or asset value up to Rs 1 lakh crore – will be required to pay 30% tax on the fair market value or undisclosed income, along with an additional 30% tax in lieu of penalty, in exchange for immunity from prosecution.The second category covers cases where income is declared or taxes are paid but the foreign asset itself is not declared.
For such taxpayers, immunity from penalty and prosecution will be available on payment of a fixed fee of Rs 1 lakh, provided the value of assets does not exceed Rs 5 crore.“The amnesty is a bit tepid. There is no reason to put a limit of Rs 5 lakh crore if Indian tax is paid in full or the asset is acquired while the taxpayer is not resident. Either way, such foreign income or assets will not be taxable in India in any case,” said Sandeep Bhalla, Partner, Dhruva Advisors.
Likewise, even in cases where 30% tax is charged plus 30% penalty, there was no reason to limit such disclosures to Rs 1 crore.
There is a need for foreign exchange to become part of the system.”Separately, the government has also proposed relaxing prosecution provisions under the Black Money Act for minor non-disclosures. Residents will no longer face criminal proceedings for foreign assets (other than immovable property) where the total value does not exceed Rs 20 lakh. This change will apply retroactively from October 1, 2024.
