Budget 2026 offers six-month window to disclose overseas income and assets
New Delhi, Feb 1, 2026
Missed declaring foreign income or assets? Budget 2026 offers a second chance
For thousands of students, young professionals, tech employees, and relocated NRIs who may have made genuine mistakes while reporting foreign income or assets, Union Budget 2026–27 offers a rare second chance.
In her Budget speech, Nirmala Sitharaman announced a one-time, six-month foreign asset disclosure scheme aimed at helping small taxpayers regularise overseas income or assets that were not correctly reported earlier.
The scheme recognises that many individuals—especially first-time earners, employees who worked abroad briefly, or those who relocated overseas—often miss complex disclosure requirements despite having no intent to evade tax.
"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
The proposal acknowledges that many compliance lapses arise from lack of awareness, complex reporting rules, or short-term overseas work, rather than deliberate tax evasion.
Who can use the scheme
The scheme applies to two categories of taxpayers:
Category A: Taxpayers who did not disclose overseas income or assets at all
Eligible if undisclosed income or asset value is up to ₹1 crore
Tax payable:
30% of the fair market value of the asset or undisclosed income, plus
30% as additional income tax in place of penalty
In return, taxpayers receive immunity from prosecution
"For category (A), the limit of undisclosed income/asset is proposed to be up to 1 crore rupees. They need to pay 30 percent of Fair Market Value of asset or 30 percent of undisclosed income as tax and 30 percent as additional income tax in lieu of penalty and would thereby get immunity from prosecution," said the FM.
Category B: Taxpayers who paid tax on overseas income but failed to declare the asset acquired
Applicable if asset value is up to ₹5 crore
Requires payment of a one-time fee of ₹1 lakh
Immunity from both penalty and prosecution will be granted
"For category (B), asset value is proposed to be up to 5 crore rupees. Here, immunity from both penalty and prosecution will be available with the payment of fee of 1 lakh rupees,".
Why this matters
Under existing rules, even unintentional failure to disclose foreign assets can attract steep penalties and criminal action. The proposed scheme offers a time-bound, low-stress exit route for taxpayers to correct past mistakes and become fully compliant.
For many individuals affected by global mobility—such as students studying abroad or professionals on overseas assignments—the scheme provides a practical opportunity to clean up disclosures and move forward without the fear of litigation.
The six-month window will be critical, and eligible taxpayers are advised to review their foreign income and asset disclosures carefully during this period.
“Introducing a one-time window for the disclosure of foreign assets represents a thoughtful and pragmatic step towards enhancing voluntary compliance and bringing greater transparency into the tax system. By offering taxpayers a structured six-month period to regularise their foreign asset holdings, the government is acknowledging the realities of cross-border wealth and providing a clear, time-bound opportunity to correct past omissions without the fear of disproportionate penalties," said Rajarshi Dasgupta, Executive Director - Tax, AQUILAW.
This measure is likely to incentivise regularisation of irregular disclosures, broaden the tax base, and reduce disputes, while balancing the need for enforcement with fairness.
"By coupling compliance flexibility with a fixed deadline, the framework can foster trust between taxpayers and the revenue authorities and bring unreported offshore assets into the formal tax net," said Dasgupta.
[The Business Standard]
