IT Department Urges Select Taxpayers to Disclose Undeclared Overseas Assets Under FAST-DS:

The Income Tax Department has started reaching out to select taxpayers who own residential and commercial properties in the United Arab Emirates (UAE), urging them to disclose their undeclared foreign assets under its ongoing Foreign Assets of Small Taxpayers-Disclosure Scheme (FAST-DS), according to sources in the Ministry of Finance.

The department is using information received from other countries under the Automatic Exchange of Information (AEOI) system to encourage taxpayers to declare foreign assets that may not have been reported in their income tax returns. Details of assets reported by foreign countries against taxpayers’ Permanent Account Numbers (PANs) have been made available on the income tax e-filing portal.

Around 1,100 taxpayers have submitted applications under FAST-DS since the scheme was launched on August 16. The deadline for making disclosures is December 31. Taxpayers can log in to the e-filing portal to access information about their foreign assets for the three-year period from 2022 to 2024.

A Finance Ministry source said the department has displayed only information received under the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA). Information received through other international agreements has not been displayed because of certain risk factors and confidentiality commitments. The department also gathers information about foreign assets from other sources.

At a high-level meeting on October 23, the Income Tax Department decided that relevant information could also be shared directly with taxpayers, wherever possible, to encourage them to take advantage of the scheme, the source said.

The department had already sent emails and messages to select taxpayers, providing details about their overseas shares, bank accounts and other assets. The emails carried the subject line, “Important advisory: opportunity for voluntary compliance regarding FAST-DS, 2026”, and were described as system-generated communications.

India receives information about foreign financial accounts held by its residents through international tax reporting systems such as CRS and FATCA. The information can include account holders’ names, addresses, tax identification numbers, account numbers, account balances and earnings from interest, dividends and other financial investments. These systems are designed to improve transparency and help tax authorities identify possible tax evasion.

However, the scheme has raised concerns among taxpayers over the cost of disclosure, particularly among salaried employees who received restricted stock units (RSUs) or employee stock ownership plans (ESOPs) but did not report them in their income tax returns. Many such employees, especially those working in the technology sector, startups and foreign companies, are worried about the fees and penalties involved.

Under the scheme, even employees who have not made any actual profit from their foreign shares may have to pay Rs 1 lakh to disclose certain assets. The amount has been criticised by some taxpayers as too high, particularly in cases where the assets have not generated any financial gain.

FAST-DS covers two categories of foreign assets and income. The first applies to undisclosed foreign income or assets worth up to Rs 1 crore that have never been taxed in India. In such cases, taxpayers must pay tax equal to 30% of the fair market value of the assets or the undisclosed income, along with an additional 30% of that amount in lieu of a penalty.

The second category covers foreign assets worth up to Rs 5 crore that were either already taxed in India or acquired when the taxpayer was a non-resident, but were not reported in the relevant section of the income tax return. Taxpayers in this category can disclose the assets by paying a fee of Rs 1 lakh.

According to the Income Tax Department, making a valid declaration under FAST-DS provides protection from further tax assessments, penalties and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Taxpayers who disclose eligible, already-accounted-for foreign assets and income by paying the Rs 1 lakh fee will also avoid the Rs 10 lakh penalty prescribed for each year of non-disclosure under the Black Money Act.