Undisclosed foreign income refers to the total amount of income of an assessee from a source located outside India, which was chargeable to tax in India, but which has not been offered to tax.
The Income Tax Department has rolled out the Foreign Assets of Small Taxpayers Disclosure Scheme with effect from Sunday, August 16. The scheme will facilitate disclosure of foreign assets up to ₹5 crore. Declarations can be made till December 31, 2026.The scheme follows a budget announcement. “To address practical issues of small taxpayers like students, young professionals, tech employees, relocated NRIs, and such others, I propose to introduce a one-time 6-month foreign asset disclosure scheme for these taxpayers to disclose income or assets below a certain size,” Finance Minister Nirmala Sitharaman had said in her budget speech for FY27.In a set of FAQs (Frequently Asked Questions), the department said that undisclosed asset located outside India means “an asset (including a financial interest in any entity) located outside India, held by the assessee in his own name or in respect of which he is the beneficial owner, where he has no explanation about the source of investment, or the explanation given is, in the opinion of the Assessing Officer, unsatisfactory.” Undisclosed foreign income refers to the total amount of income of an assessee from a source located outside India, which was chargeable to tax in India, but which has not been offered to tax.The aggregate value of the undisclosed asset located outside India (as on March 31, 2026) and the undisclosed foreign income must not exceed ₹1 crore. The aggregate value of the assets located outside India must not exceed ₹5 crore, the department said. The total amount payable would be the aggregate of tax of 30 per cent of the value of the undisclosed asset located outside India or 30 per cent of the undisclosed foreign income declared along with amount equal to the tax paid. For example, if an undisclosed foreign bank account is valued at ₹60 lakh and undisclosed foreign income is ₹20 lakh, total payable would be ₹48 lakh (₹36 lakh for foreign bank accounts and ₹12 lakh for foreign income).Post filing the declaration, the department will issue an order within a month. Then the assessee will get two months’ time to pay. This can be extended by another two months but with simple interest at 1 per cent for every month or part of a month of delay.The scheme provides immunity from the levy of any further tax or penalty, and from prosecution, under the Black Money Act, 2015, in respect of the income or asset so declared. Further, the income or amount of investment in the asset declared under this scheme shall not be included in the total income of the taxpayer under the Income-tax Act, 1961 or the Black Money Act, 2015, the department said.Published on August 15, 2026
