FOREIGN ASSETS DISCLOSURE GETS A FRESH WINDOW UNDER FINANCE BILL, 2026 — CONCLUDING PART II

From Declaration to Discipline — The Administrative Soul of FAST-DS 2026

The proposed Foreign Assets Disclosure Scheme, 2026 (FAST-DS 2026), introduced through Clauses 114 to 128 of the Finance Bill, 2026, represents a calibrated legislative measure to encourage voluntary disclosure of undisclosed foreign income and assets. In Part I of this analytical series, Clauses 114 to 119 were examined in detail; together, they collectively establish the foundational architecture of the scheme by defining key expressions, prescribing eligibility conditions, determining the scope of disclosure, and providing the mechanism for computing and communicating settlement liability. These provisions establish the philosophical and procedural framework that enables taxpayers to regularise foreign-asset non-compliance through a structured disclosure window, supported by statutory clarity and settlement certainty.

However, the effectiveness of any voluntary disclosure framework ultimately depends not merely on its declaratory provisions but also on the administrative and procedural safeguards governing its implementation. In this context, Clauses 120 to 128 are critical, as they establish the statutory framework for settlement finality, immunity safeguards, administrative powers, rule-making authority, and implementation flexibility. These provisions collectively transform FAST-DS 2026 from a conceptual disclosure opportunity into a structured regulatory compliance programme that ensures transparency, consistency, and administrative credibility.

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Law is not merely an instrument of punishment; it also provides direction,
It reconnects those who have strayed with the discipline of order and compliance.

Against this legislative and philosophical backdrop, the operational strength of FAST-DS 2026 now comes into sharper focus. The schemes true effectiveness lies in the administrative safeguards, settlement assurances, and implementation mechanisms embedded in Clauses 120 to 128 of the Finance Bill, 2026. A closer examination of these provisions is essential to understanding how voluntary disclosure is translated into structured, legally enforceable compliance.

Clauses 120 -Any income or asset declared not to be included in total income.

Clause 120 of the proposed Foreign Assets Disclosure Scheme, 2026 (FAST-DS 2026) embodies one of the most significant confidence-building assurances offered to declarants. It provides that the income or the amount of investment in a foreign asset declared under Section 118 shall not be included in the total income of the declarant for any assessment year under either the Income-tax Act, 1961 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, provided the declarant makes payment of the amount determined under Section 119 within the extended period permitted under sub-section (3) of that section. In essence, this provision establishes the legal finality of disclosure by granting statutory immunity from future income inclusion once the prescribed financial obligation under the scheme is fulfilled within the permitted timeframe.

The conceptual importance of this clause lies in its recognition that voluntary disclosure schemes derive legitimacy only when taxpayers receive certainty regarding the closure of past tax exposure. Without such assurance, declarants may remain hesitant to participate, fearing that disclosure could trigger new reassessment proceedings, exposure to penalties, or investigative scrutiny under parallel statutes. Clause 120 directly addresses this apprehension by providing a legislative guarantee that income or investment value declared and settled under FAST-DS 2026 shall be insulated from recomputation or reassessment under both domestic income tax provisions and the Specialised Black Money Act, 2015.

A careful reading of the clause reveals two fundamental components that determine whether this immunity applies. First, the declaration must be made in the manner prescribed under Section 118 to ensure the disclosure is complete, truthful, and procedurally compliant. Second, the declarant must make payment of the amount communicated under Section 119 within the extended period allowed under sub-section (3) of that section. This conditional structure reflects a legislative balancing exercise: the scheme grants immunity, but only when the declarant fulfils both disclosure and financial settlement obligations in full.

The inclusion of payment within the extended period under Section 119(3) is particularly noteworthy. Voluntary disclosure schemes often face practical challenges in which declarants, despite a bona fide intention to comply, may require additional time to mobilise funds for settlement. By explicitly linking immunity to payment made within the extended statutory window, Clause 120 introduces pragmatic flexibility without compromising compliance discipline. This approach enhances the schemes accessibility while ensuring that declarants who fail to complete settlement within the legally prescribed timeframe are not granted immunity.

Another critical interpretational feature of Clause 120 is its dual statutory protection. The provision explicitly bars inclusion of declared income or asset value under both the Income-tax Act, 1961 and the Black Money Act, 2015. This dual immunity has substantial compliance significance. While the Income-tax Act governs the general reporting and assessment of income, the Black Money Act specifically addresses undisclosed foreign income and assets and imposes stringent penal consequences. By simultaneously extending immunity across both statutes, the legislature eliminates the possibility of parallel exposure, thereby strengthening taxpayer confidence in the finality of disclosure settlement.

From a policy perspective,Clause 120 reinforces the cooperative compliance philosophy underlying FAST-DS 2026. Modern tax administration increasingly recognises that voluntary compliance programmes succeed when taxpayers perceive disclosure as a safe and legally reliable pathway towards regularisation. If declarants fear that disclosure might lead to further statutory proceedings under different legislative frameworks, participation levels may decline significantly. By legislatively ring-fencing declared assets from future income inclusion, Clause 120 transforms FAST-DS 2026 from a mere reporting opportunity into a structured settlement mechanism with legally enforceable closure.

The clause also reflects legislative continuity with earlier voluntary disclosure frameworks introduced in Indian tax history. Historically, successful disclosure schemes have always incorporated finality provisions assuring taxpayers that once settlement payments are made, past liabilities in respect of disclosed assets would not be reopened.Clause 120 continues this established compliance philosophy while integrating it within the specialised framework governing foreign asset disclosure and cross-border financial transparency.

From an administrative perspective,Clause 120 plays a vital role in reducing future litigation risk. Tax disputes frequently arise when statutory provisions are unclear regarding the finality of settlements. By unequivocally specifying that declared income or investment shall not be included in total income for any assessment year, the clause minimises interpretational ambiguity and strengthens legal certainty. Such clarity benefits both taxpayers and tax administration by reducing post-settlement controversies and enforcement disputes.

Another dimension of significance is the reference to “income or amount of investment in an asset.” This phrase ensures that immunity extends not only to undisclosed income used to acquire foreign assets but also to the investment value of those assets. In cross-border asset disclosures, taxpayers may hold foreign bank balances, financial instruments, immovable property, or equity investments acquired through previously undisclosed income. Clause 120 recognises this practical complexity and ensures comprehensive settlement coverage by insulating both the source income and the asset investment value from future inclusion.

However, it is equally important to recognise that the immunity granted under Clause 120 is conditional rather than automatic. Failure to make payment within the extended period permitted under Section 119(3) may result in the declarant losing the statutory protection offered by the clause. This conditional immunity reinforces the integrity of the scheme by ensuring that disclosure alone does not entitle declarants to settlement finality unless accompanied by timely financial compliance.

In the broader compliance ecosystem, Clause 120 also serves as a behavioural incentive encouraging truthful and complete declarations. When taxpayers are assured that settled disclosures will not invite retrospective assessment or penalty proceedings, they are more likely to disclose assets comprehensively rather than selectively. This behavioural compliance outcome is particularly significant in foreign asset reporting, where partial disclosure can undermine both revenue mobilisation and transparency objectives.

Clause 121-Any Income or Asset Declared Not to Affect the Finality of Completed Assessments

Clause 121 provides that once income or assets are declared under FAST-DS 2026 and payment is made thereon, the declarant shall not be entitled to seek rectification or revision of any assessment under the Income-tax Act, 1961 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The provision also prohibits the declarant from claiming any set-off or relief in appeal, reference, or other proceedings relating to such assessments.

This clause complements the immunity granted under Clause 120 by ensuring the finality of settlement. While the scheme protects declarants from future inclusion of disclosed income or assets in their tax base, Clause 121 prevents reopening of past assessments or deriving additional tax benefits from disclosure. The restriction safeguards administrative certainty and ensures that FAST-DS 2026 operates as a conclusive compliance settlement mechanism.

The bar applies specifically to matters connected with disclosed foreign income or assets and does not affect the declarant’s rights in respect of unrelated tax proceedings.

Clause 122- Amount paid in pursuance of a declaration is non-refundable.

Clause 122 provides that any amount paid under Section 119 pursuant to a declaration made under Section 118 shall not be refundable. The provision establishes the principle that payments made under FAST-DS 2026 constitute a final and irreversible settlement of tax liability relating to disclosed foreign income or assets.

The legislative intent behind this clause is to preserve certainty and prevent post-disclosure disputes or refund claims after voluntary settlement has been concluded. Voluntary disclosure schemes operate on the doctrine of conclusive closure, where declarants obtain immunity and legal certainty in exchange for final settlement payments. Allowing refunds could undermine this objective and introduce avoidable litigation.

Accordingly, Clause 122 reinforces the self-contained and final nature of FAST-DS 2026 by ensuring that, once settlement dues are paid, the declarant may not seek a refund or adjustment of such amount under any circumstances.

Clause 123 -Grant of immunity from penalty and prosecution

Clause 123 provides a major relief to taxpayers who make a valid declaration under FAST-DS 2026 and pay the required amount in accordance with the scheme. It states that such declarants shall be granted immunity from any further tax demand, penalty, or prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, in respect of the income or foreign asset disclosed.

In simple terms, once a taxpayer truthfully declares undisclosed foreign income or assets and completes the required payment under the scheme, the Government will not initiate any further legal action regarding those assets or income. This protection applies not only to penalties but also to criminal prosecution under the Black Money Act.

The immunity covers income or assets relating to the financial year ending 31 March 2026 and any earlier years. This means the scheme allows taxpayers to regularise past non-compliance with foreign-asset disclosure obligations and obtain complete legal closure, provided the disclosure is valid and the payment obligations are fulfilled.

Overall, Clause 123 strengthens taxpayer confidence in the scheme by ensuring that voluntary disclosure will result in a final settlement and protection from future legal consequences arising from the disclosed foreign assets or income.

Clause 124- Non-application of Scheme

Clause 124 specifies the circumstances under which the benefits of FAST-DS 2026 will not be available. It clarifies that the scheme is intended solely for genuine voluntary disclosures and cannot be used to regularise income or assets associated with serious legal violations or cases that have already been finally assessed under the Black Money Act.

Firstly, the scheme will not apply to any foreign income or asset that represents the proceeds of crime, whether directly or indirectly, if proceedings have been initiated or are pending under the Prevention of Money Laundering Act, 2002 (PMLA). In simple terms, if a foreign asset is linked to criminal activities such as money laundering or illegal transactions and action has already been taken under PMLA, the taxpayer cannot use FAST-DS 2026 to obtain immunity or settlement benefits.

Secondly, the scheme will not apply to foreign income or assets relating to any assessment year in which the assessment has already been completed under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. This means that if tax authorities have already finalised assessment proceedings for a particular year under the Black Money Act, the taxpayer cannot reopen or settle those matters through this scheme.

Overall,Clause 124 ensures that FAST-DS 2026 remains a voluntary compliance opportunity and is not misused to settle cases involving criminal proceeds or matters that have already been legally concluded under the Black Money law.

Clause 125- Effect of Declaration on Pending Assessment Proceedings

Clause 125 explains how a declaration made under FAST-DS 2026 will be treated if assessment proceedings are already pending under the Income-tax Act, 1961 or the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

The clause provides that if a taxpayer declares any foreign income or asset under the scheme while assessment proceedings relating to that income or asset are still ongoing, the Assessing Officer must consider such declaration while completing the assessment. In simple terms, the tax officer cannot ignore the disclosure made under FAST-DS 2026 and must take it into account while finalising the assessment order.

This provision helps avoid duplication of tax demands or conflicting conclusions. Once the taxpayer voluntarily discloses the income or asset and settles the liability under the scheme, the pending assessment proceedings are expected to be completed in a manner consistent with that disclosure.

Overall,Clause 125 ensures coordination between the voluntary disclosure mechanism and regular assessment proceedings, thereby promoting administrative clarity and reducing unnecessary disputes relating to the same foreign income or asset.

Clause 126- Power Board issue directions, etc.

Sub-clause (1) gives power to the Central Board of Direct Taxes (CBDT) to issue directions or orders to income-tax authorities for the proper implementation of FAST-DS 2026. These directions may relate to administrative procedures, processing of declarations, or any other matter required for the effective operation of the scheme.

The purpose of this sub-clause is to ensure uniform application of the scheme across the country. Since voluntary disclosure schemes involve procedural and administrative complexities, this power allows the Board to guide tax authorities and remove practical difficulties that may arise during implementation.

The proviso to sub-clause (1) clarifies that while the Board can issue general administrative directions, it cannot instruct tax authorities to decide a particular case in a specific manner. In simple terms, the Board can provide policy guidance but cannot interfere with the Assessing Officers independent decision-making in individual cases. This safeguard maintains fairness and prevents misuse of administrative powers.

Sub-clause (2) expands the Board’s authority by allowing it to issue general or special orders laying down guidelines, principles, or procedures for implementing FAST-DS 2026. These orders may pertain to declaration processing, compliance procedures, or revenue collection.

The sub-clause also permits the Board to relax certain provisions of the scheme if it considers such relaxation necessary in the public interest. This flexibility is important because voluntary disclosure schemes may encounter practical difficulties during implementation, and timely administrative relaxation can help ensure the schemes smooth functioning.

 Clause 127- Power to make rules.

Sub-clause (1) authorises the Central Government to make rules, through notification in the Official Gazette, for the proper implementation of FAST-DS 2026. In simple terms, while the scheme establishes the main legal framework, this provision allows the Government to prescribe detailed procedures and operational requirements through rules, thereby facilitating the smooth and practical functioning of the scheme.

Sub-clause (2) explains the matters for which such rules may be framed. It clarifies that rules can prescribe the form and verification process for making declarations under Section 118, the procedure for passing orders and communicating tax liability under Section 119, and the manner in which payment under the scheme is to be made and reported. The rules may also prescribe formats for issuing payment certificates, methods for determining the value of foreign assets, and procedures for calculating the amount payable under the scheme. Additionally, the Government is empowered to frame rules for any other matter necessary for the effective implementation of FAST-DS 2026. This sub-clause ensures administrative clarity and procedural standardisation.

Sub-clause (3) provides parliamentary oversight over the rules made under the scheme. It states that every rule framed by the Central Government must be placed before both Houses of Parliament for a specified period. Parliament has the authority to modify or annul such rules. However, any action taken under the rule prior to such modification or cancellation will remain valid. This provision ensures transparency, legislative supervision, and accountability in the rule-making process.

Clause 128 — Power to Remove Difficulties

Sub-clause (1) gives power to the Central Government to remove any practical or administrative difficulty that may arise while implementing FAST-DS 2026. The Government can issue an order to resolve such difficulty, but the order must remain consistent with the provisions of the scheme. In simple terms, this sub-clause allows the Government to address unforeseen issues and ensure the smooth functioning of the scheme without changing its basic legal framework.

Sub-clause (2) places a time limit on this power. It states that the Government may issue such difficulty-removal orders only within two years of the date on which the scheme comes into force. This restriction ensures that the power is used only during the initial implementation phase and prevents indefinite administrative intervention.

Sub-clause (3) provides for parliamentary oversight. It requires that every order issued to remove difficulties be placed before both Houses of Parliament as soon as possible after its issue. This ensures transparency and allows Parliament to review the Governments exercise of such power.

Valuation Challenges and Cross-Border Documentation Issues

Foreign asset disclosure frequently involves complex valuation challenges arising from currency conversion, historical cost determination, and jurisdiction-specific valuation methodologies. Taxpayers holding legacy or inherited foreign assets may face significant documentation gaps. Professional certification and valuation support are therefore likely to become integral components of disclosure compliance. The practical operation of FAST-DS 2026 may be better appreciated through the following illustration:

Mini Illustration — Valuation Documentation Difficulty

A taxpayer inheriting foreign property may lack historical acquisition records, requiring reliance on certified valuation reports or fair market valuation methodology prescribed under subordinate rules.

The Expanding Advisory Role of Tax Professionals

FAST-DS 2026 significantly expands the advisory landscape for tax professionals. Practitioners may increasingly undertake foreign asset audits, cross-border compliance verification and strategic disclosure counselling. Advising taxpayers under disclosure schemes also involves addressing reputational concerns and financial implications. Consequently, professional integrity and balanced advisory judgment become critically important.

Beyond Disclosure — Building India’s Future Compliance Culture

FAST-DS 2026 reflects a significant philosophical evolution in India’s foreign asset compliance framework. While earlier regulatory approaches predominantly relied on enforcement-driven deterrence, the scheme acknowledges that sustainable compliance is achieved more effectively through structured voluntary correction, supported by legal certainty, settlement finality, and administrative transparency. The clauses analysed in this Part, particularly Clauses 120 to 128, reinforce this philosophy by creating a carefully balanced compliance environment where immunity, procedural discipline, and administrative safeguards operate together to inspire taxpayer confidence while protecting revenue integrity.

In an era in which global financial transparency is rapidly expanding through automatic exchange of information frameworks and cross-border regulatory cooperation, the possibility of maintaining undisclosed foreign assets is steadily diminishing. Disclosure frameworks such as FAST-DS 2026, therefore, represent not merely compliance opportunities but transitional bridges enabling taxpayers to realign with an increasingly irreversible global transparency ecosystem. By offering legal closure alongside structured compliance safeguards, the scheme attempts to convert voluntary disclosure into a credible pathway towards long-term reporting discipline.

For tax professionals, FAST-DS 2026 opens an evolving advisory frontier that demands not only technical interpretation of statutory provisions but also ethical guidance and responsible compliance counselling. The scheme requires professionals to assist taxpayers in evaluating disclosure decisions with clarity, prudence, and regulatory foresight. For taxpayers, it provides an opportunity to transform legacy compliance gaps into structured regulatory settlements, thereby strengthening financial credibility and reducing future litigation risk.

Ultimately, the success of FAST-DS 2026 will depend upon its ability to sustain the delicate balance between taxpayer assurance and enforcement credibility. If implemented with administrative consistency, procedural fairness, and transparent verification mechanisms, the scheme may emerge as a landmark milestone in India’s transition towards cooperative compliance and globally aligned tax transparency governance.

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(When law becomes the foundation of trust, Compliance transforms from obligation into culture).