FAST-DS 2026: four questions decide ₹1 lakh or 60% of the asset

Summary

The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 closes on 31 December 2026 and prices the same unreported foreign asset two ways: a flat ₹1,00,000 where the money that bought it can be explained, or 30% tax plus an equal amount, about 60% of value, where it cannot. Four questions decide which, the e-filing portal asks none of them before you commit to a declaration, and the question that decides most cases is not whether you reported the income.

The situation

A salaried employee at a multinational in Pune has held vested US RSUs since 2021, filed a plain ITR-2 every year, and never heard of Schedule FA until a line appeared in his Annual Information Statement this July. CBDT's order of 8 July 2026 pushed three calendar years of foreign-asset information received under the automatic exchange agreements into taxpayers' AIS, and since 24 July the department has been sending SMS and e-mail reminders to report foreign assets. The calendar-2025 data is expected in September or October, possibly later.

On a ₹40 lakh holding the scheme's two routes cost about ₹1 lakh and about ₹24 lakh. Every explainer published since mid-August describes both routes. Very few walk through the test that puts a given asset on one side or the other, and the commonest wrong answer comes from a person who has been paying tax on the dividends all along.

The rule

The scheme is Chapter IV, sections 130 to 144 of the Finance Act, 2026. The Rules were notified by Notification 114/2026 of 14 August 2026 and came into force on 16 August 2026. The window runs from 16 August to 31 December 2026; the valuation date for everything is 31 March 2026; Form 1 is filed on the e-filing portal under Other Acts.

The two caps are tested separately, and each limb stands or falls on its own. CBDT's FAQs of 13 August 2026 put the Category A cap as "the aggregate value of the undisclosed asset located outside India (as on 31st March, 2026) and the undisclosed foreign income must not exceed ₹1 crore", and the Category B cap as "the aggregate value of the foreign assets must not exceed ₹5 crore".

The four questions, asked in order for each asset:

1. Was the asset reported in Schedule FA of the relevant return? If yes, there is nothing to declare for the asset.
2. Can the source of the investment be satisfactorily explained?
3. Was that source income offered to tax where it should have been, or was the asset acquired while you were non-resident?
4. Was the income the asset generated offered to tax where it should have been?

An unreported asset whose source cannot be explained, or whose source income was never taxed, is Category A. An unreported asset whose source is explained and taxed (or was acquired while non-resident) is Category B. Income never offered to tax is Category A whatever route the asset takes, so one asset can sit in both categories at once: Category B on the asset, Category A on its income.

Valuation at 31 March 2026 is, for most classes, the higher of acquisition cost and open-market value, with one exception that matters:

Rule 5(2) gives a 20% tolerance: for assets other than bank accounts, a variance of up to 20% between the declared value and the value the department arrives at does not by itself make the declaration one obtained by misrepresentation. Bank accounts are excluded from that protection.

Excluded from the scheme altogether: proceeds of crime or a pending PMLA proceeding, and an asset already assessed under the Black Money Act, 2015. After Form 1 the authority communicates the amount payable in Form 2 within about a month, payment falls due within two months (extendable, with simple interest of about 1% a month), Form 3 carries the proof of payment and Form 4 is the certificate that carries the immunity. Miss the outer limit and the declaration lapses.

Where people go wrong

"I paid tax on the dividends, so I am fine." Reported income does not shield an unexplained asset. A holding whose source cannot be explained is Category A even where every rupee of income it produced was correctly returned. That is the trap in question 2, and it is the one the department's own scenarios put first.

Valuing the bank account on the closing balance. The prescribed measure is aggregate qualifying deposits since the account was opened, adjusted as the Rules provide. A dormant account can carry far more in lifetime deposits than its closing balance shows. Closing balance is both the wrong measure and the one line on the declaration that Rule 5(2) does not protect.

Treating the ₹20 lakh Black Money Act threshold as a FAST-DS threshold. The relief for small bank balances under the 2015 Act is a separate regime. It is not a floor below which FAST-DS does not apply and it does not modify either cap.

Adding the caps wrong. The ₹1 crore is tested on asset value plus undisclosed foreign income. An asset of ₹95 lakh with ₹10 lakh of untaxed income aggregates to ₹1.05 crore and is over the cap, even though the asset alone is under it.

Waiting for the AIS to catch up. The calendar-2025 line may not appear before the window shuts. The scheme's date is 31 December 2026 regardless of what the AIS shows, and an asset the AIS has not yet displayed is still an undisclosed asset.

Assuming the ₹1,00,000 is once. Whether Category B's fee is per declaration or per asset is read differently by different professional sources, and CBDT has not settled it. For a single asset it makes no difference; for three, it is the difference between ₹1 lakh and ₹3 lakh, and the honest answer today is a range.

What to do

1. List every foreign asset held at any time since the first year you were resident and ordinarily resident, and mark for each whether it appeared in Schedule FA of that year's return.
2. For each unreported asset, answer the four questions in order and write down the answer to question 2 with the evidence: the salary slip, the sale deed, the inheritance record, the non-resident years.
3. Value each asset at 31 March 2026 on the basis in the table, and for a bank account obtain the statement from the date of opening, not the last statement.
4. Test the two caps separately, adding untaxed foreign income to the Category A figure, and read the exclusions before you spend money on a valuer.
5. File Form 1 well inside December, then diarise Form 2, the payment date and Form 3; the immunity arrives only with Form 4.

The tool

I built a small route resolver for this because the same four questions came up with every client and the portal begins after the classification, the valuation and the documents are already settled. You enter each asset by class, its cost and market value at 31 March 2026 (or its deposits, for a bank account), any income never offered to tax, and the four answers; it tells you the route per asset, tests both caps separately and says what each was measured on, prices the declaration, shows a range instead of a number wherever more than one Category B asset makes the fee ambiguous, applies the 20% band and warns where a bank-account figure sits outside it, and prints a handout with the valuation basis and the document each figure must come from. It does not convert currencies (the version live today asks for rupee figures), it does not value anything or know your residential history year by year, and it does not file. It stores nothing at all, on purpose: you are typing the particulars of an asset you did not report, and that belongs on your own machine.

See whether an asset is Category A or Category B

Sources

1. CBDT — FAST-DS FAQs, 13 August 2026 — https://www.incometaxindia.gov.in/documents/81799/15520974/FAST-DS-FAQs.pdf
2. EY India — Foreign assets disclosure scheme operationalised (August 2026) — https://www.ey.com/en_in/technical/alerts-hub/2026/08/foreign-assets-disclosure-scheme-operationalized
3. KPMG India — Flash News on the FAST-DS Rules, 2026 — https://assets.kpmg.com/content/dam/kpmgsites/in/pdf/2026/08/KPMG-Flash-News-FAST-DS-Rules-2026.pdf
4. A2Z Taxcorp — CBDT notifies the FAST-DS Rules, 2026, with the FAQs reproduced (17 August 2026) — https://a2ztaxcorp.net/cbdt-notifies-foreign-assets-of-small-taxpayers-disclosure-scheme-rules-2026-one-time-window-for-eligible-taxpayers-to-regularise-specified-foreign-assets-and-income-with-detailed-faqs/
5. TaxGuru — FAST-DS 2026: foreign bank account, ESOP and RSU disclosure window (8 September 2026) — https://taxguru.in/income-tax/fast-ds-2026-foreign-bank-account-esop-rsu-disclosure-window.html
6. CAclubindia — FAST-DS 2026: foreign income and foreign asset disclosure, taxability and Schedule FA (the four-step examination and the ten-scenario table) — https://www.caclubindia.com/articles/fast-ds-2026-foreign-income-and-foreign-asset-disclosure-taxability-schedule-fa-56109.asp
7. CA Alok Kumar — Foreign Assets Disclosure Scheme 2026 (valuation by asset class, the 20% band) — https://caalokkumar.com/my-writing/foreign-assets-disclosure-scheme-2026/
8. EZTax — Foreign Assets of Small Taxpayers Disclosure Scheme (per-asset reading of the fee) — https://eztax.in/foreign-assets-of-small-taxpayers-disclosure-scheme
9. TaxUpdate — CBDT order of 8 July 2026 on AEOI data in AIS — https://taxupdate.in/income-tax/823/foreign-assets-ais-aeoi-schedule-fa-ay-2026-27-cbdt-order-8-july-2026/