Old overseas bank account? India tax window open until Dec 31

An overseas bank account opened years ago to receive salary or scholarship payments can be easy to forget after returning to India. But once a person becomes a resident, certain foreign assets must 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 took effect on 16 August. Eligible taxpayers can make declarations until 31 December 2026. The scheme covers specified undisclosed foreign assets and income, as well as some foreign assets acquired legitimately but 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.

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 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. An apparently insignificant old account is worth reviewing.

Not every unreported foreign asset is treated the same way under FAST-DS.

The first category 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. 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 acquired from income already offered to tax, or an asset acquired when the taxpayer was a non-resident but not reported after the person became resident in India. The aggregate value of qualifying foreign assets can be up to ₹ 5 crore. 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.

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 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 with an old overseas account or investment missed in past returns, the December 31 deadline offers a limited opportunity to establish what was held, how it was funded and whether it was previously taxed. That assessment should come before deciding whether FAST-DS is applicable.