Budget 2026: A Six-Month Window to Disclose Foreign Assets

A Second Chance for Tax Compliance

In a significant move to ease compliance for small taxpayers, Finance Minister Nirmala Sitharaman, in the Union Budget 2026, announced a one-time, six-month foreign asset disclosure scheme. This initiative provides a limited window for individuals who may have inadvertently failed to report overseas income or assets to regularise their tax affairs. The scheme is specifically targeted at addressing the practical challenges faced by students, young professionals, tech employees, and relocated Non-Resident Indians (NRIs) who often navigate complex international tax laws.

The Rationale Behind the Scheme

The government has acknowledged that many instances of non-disclosure, particularly among globally mobile citizens, stem from a lack of awareness or genuine mistakes rather than an intent to evade taxes. Holding a foreign bank account while studying abroad, receiving stock options during a brief overseas work assignment, or earning small amounts from part-time work can create foreign assets that are often overlooked in Indian tax filings. Under existing laws, such omissions can attract severe penalties and prosecution. This scheme offers a structured, low-stress pathway to become fully compliant.

Who Can Benefit from the Disclosure Window?

The scheme is structured into two distinct categories to cater to different types of non-compliance:

Category A: For Complete Non-Disclosure This category is for taxpayers who did not disclose their overseas income or assets at all. To be eligible, the total value of the undisclosed income or asset must not exceed ₹1 crore. Individuals opting for this route will be required to pay a total of 60% on the value of the asset or income. This is composed of:

• 30% tax on the fair market value of the asset or the undisclosed income.
• An additional 30% tax, which serves in place of a penalty.

Upon successful payment, the taxpayer will be granted complete immunity from prosecution under the relevant tax laws.

Category B: For Partial Disclosure This category is designed for individuals who had disclosed their overseas income and paid the due taxes but failed to declare the specific asset that was acquired from that income. This applies to assets with a value of up to ₹5 crore. To regularise their filings, these taxpayers need to pay a nominal one-time fee of ₹1 lakh. In return, they will receive immunity from both penalty and prosecution.