FAST-DS 2026: Unreported US Shares? Disclose by 31 Dec

If you are an Indian resident who has held US shares, RSUs or ESPP stock for a few years, one of your past ITRs may have left out Schedule FA or reported it incompletely. A revised return can fix the current year, but for older years where the tax was paid and only the disclosure was missed, there was no clean fix.

The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 (FAST-DS 2026) adds a one-time third route. It opened on 16 August 2026 and closes on 31 December 2026. Here is who it suits, what it costs, and when you may not need it.

Key points

FAST-DS 2026 is a one-time scheme under Chapter IV (sections 130–144) of the Finance Act, 2026. Declarations close on 31 December 2026.
Category 1: untaxed foreign income or assets up to ₹1 crore. You pay 60% of the value.
Category 2: assets bought from taxed income (or while non-resident) but not reported. Flat ₹1 lakh fee, up to ₹5 crore.
A valid declaration gives Black Money Act immunity for the declared items.
Since 1 October 2024, the ₹10 lakh Black Money Act penalties do not apply where foreign assets other than immovable property total ₹20 lakh or less, so small holders may not need the scheme.
For FY 2025-26 (AY 2026-27) alone, a revised return filed by 31 December 2026 (no fee) is the simpler fix. It does not cover earlier years.

Why this matters for US stock investors

A resident and ordinarily resident individual must report foreign assets in Schedule FA of ITR-2 or ITR-3 every year. This applies even if nothing was sold, and covers US shares held through apps like Vested or INDmoney, and RSU or ESPP shares in your employer's stock plan account. Schedule FA uses the calendar year (January to December) ending in the financial year, not the April–March year used for the rest of the return.

Common lapses include:

RSUs taxed correctly through Indian payroll, but the shares never shown in Schedule FA.
Filing ITR-1, which has no Schedule FA, instead of ITR-2.
Returning to India and not reporting existing US holdings once resident.

The penalty for not disclosing a foreign asset under section 43 of the Black Money Act is ₹10 lakh. Section 42 has a similar ₹10 lakh penalty for not filing a return when you held foreign assets. On paper, each can apply for every year of default.

What FAST-DS 2026 offers

Category 1 (Sl. No. 1): undisclosed foreign income or assets. This is for money never taxed in India, such as gains earned while resident but never reported, or shares bought with such money. The value of the assets (as on 31 March 2026) plus the undisclosed income must not exceed ₹1 crore. You pay tax at 30% plus an additional amount equal to that tax, so 60% of the value declared.

Category 2 (Sl. No. 2): assets not reported, though the money behind them was clean. This covers a foreign asset bought out of income already taxed in India, or acquired while you were a non-resident, which you did not show in the relevant schedule of your return. If the aggregate value is up to ₹5 crore, the payment is a flat fee of ₹1 lakh. Above ₹5 crore you are not eligible. The FAQs do not mention RSUs or ESPP by name.

For most salaried investors, Category 2 is the relevant one: RSU perquisites were taxed through payroll TDS and app purchases were funded from taxed salary. Only the disclosure is missing.

Who can declare: an individual who was resident in India in the relevant year, where no return was filed, the asset or income was left out of a return filed before the scheme began, or it escaped assessment under section 147. A person now non-resident or RNOR can also declare if they were resident in the year the income arose or the asset was acquired.

Valuation: for listed shares, the value is the higher of (a) cost and (b) the average of the day's highest and lowest price on 31 March 2026 (or the nearest earlier trading day). Conversion to rupees is at the RBI reference rate on 31 March 2026. This differs from the SBI TT buying rate used for capital gains (Rule 115 of the Income-tax Rules, 1962). The Rules accept a variance of up to 20% from the value declared for assets other than bank accounts.

Process: you file Form 1 online with supporting evidence, such as broker statements, vesting confirmations and Form 16. The department issues Form 2, stating the amount payable, within a month from the end of the month you filed. You pay through challan ITNS 289 on the e-filing portal within two months from the end of the month you received Form 2. Then you submit Form 3 with proof of payment and receive a Form 4 certificate. File Form 1 well before 31 December; portals slow down near deadlines. Paying up to two months late costs 1% interest per month; after that the declaration is void.

What you get: immunity from further tax, penalty and prosecution under the Black Money Act for the declared items. The declared amounts are not added to your total income under the Income-tax Act either. In exchange, you cannot later claim rectification, set-off or relief for those items in past assessments. The scheme does not cover proceeds of crime under PMLA where proceedings are pending, or years where Black Money Act assessments are already complete.

Do you actually need it? The ₹20 lakh test

The Finance (No. 2) Act, 2024 widened the exclusion in sections 42 and 43 of the Black Money Act from 1 October 2024. The ₹10 lakh penalties do not apply where the aggregate value of foreign assets other than immovable property does not exceed ₹20 lakh. A CBDT instruction dated 18 August 2025 aligned prosecution under sections 49 and 50 with the same ₹20 lakh threshold.

So, broadly:

Total foreign holdings comfortably under ₹20 lakh, money already taxed: the penalty exposure is largely removed, so ₹1 lakh under FAST-DS may buy little extra. Report correctly from now on.
Holdings above ₹20 lakh, money already taxed: Category 2 at ₹1 lakh can be far cheaper than ₹10 lakh-per-year penalty exposure. This is where the scheme helps most.
Income that was never taxed in India: compare Category 1 (60% of value) with an updated return (ITR-U). An ITR-U can be filed within 48 months from the end of the relevant assessment year. It costs the normal tax and interest plus additional tax of 25% to 70% of that amount, depending on the delay. An ITR-U must increase your tax, so it cannot fix a Schedule FA-only omission where tax was already paid. Nor does it give Black Money Act immunity. Get professional advice before choosing.

The ₹20 lakh test looks at your holdings for each year of default, not today's value. How it applies to older years and pending proceedings depends on your facts, so treat it as a reason to check, not a blanket all-clear.

Worked example: Category 2 for RSU shares

Ananya, a resident engineer in Bengaluru, works for a NASDAQ-listed company. Over four years, 200 RSUs vested into her US brokerage account. Each vest was taxed as a perquisite through Indian payroll. She filed ITR-2 for AY 2023-24, AY 2024-25 and AY 2025-26, but left Schedule FA blank each time.

Prices and the exchange rate below are assumed for illustration. Use the actual high/low price for 31 March 2026 and the RBI reference rate for that date.

Step 1: Market value on 31 March 2026

Assumed day's high: $182; day's low: $176
Average: ($182 + $176) ÷ 2 = $179 per share
200 shares × $179 = $35,800

Step 2: Compare with cost. Assume her cost (taken here as the FMV at each vest) totals less than $35,800, so the higher figure, $35,800, is used.

Step 3: Convert to rupees

Assumed RBI reference rate on 31 March 2026: ₹85.50 per USD
$35,800 × ₹85.50 = ₹30,60,900

Step 4: Apply the tests

Her holdings at 31 March 2026 are well above ₹20 lakh. If her holdings in each of the three default years were also above ₹20 lakh, the theoretical exposure under section 43 is up to ₹10 lakh × 3 years = ₹30 lakh. Years in which she held fewer shares may fall under the threshold.
The RSU income was already taxed in India and the value is below ₹5 crore, so she qualifies for Category 2.
FAST-DS payment: ₹1,00,000 flat fee.

She should report the shares in Schedule FA from now on, and should include it in her AY 2026-27 return (revised, or belated by 31 December 2026 if not yet filed). The example assumes she had no unreported dividends or sale proceeds; any such income was never taxed in India and needs the ITR-U or Category 1 route.

If the same 200 shares had instead been bought with income never taxed in India, Category 1 would apply: 30% × ₹30,60,900 = ₹9,18,270 tax, plus an equal additional amount of ₹9,18,270, for a total of ₹18,36,540.

Fix this year's return first

For FY 2025-26 (AY 2026-27), the cleanest fix is still the ordinary return:

Not filed yet? A belated return under section 139(4) can be filed up to 31 December 2026, with the late fee under section 234F.
Filed, but missed Schedule FA or foreign income? File a revised return under section 139(5). Revising by 31 December 2026 attracts no fee. The Finance Act, 2026 lengthened the revision window, and commentaries put the outer date for AY 2026-27 at 31 March 2027; a revision after 31 December carries a section 234I fee of ₹1,000 (total income up to ₹5 lakh) or ₹5,000, and must be filed before assessment is completed.

While revising, report everything in one go: capital gains in Schedule CG at the right rate (STCG at slab rate, LTCG after 24 months at 12.5%), dividends in Schedule OS, foreign tax in Schedules FSI and TR, with Form 67 for US tax withheld on dividends. Our calculator computes gains at SBI TT buying rates; the guides on US stock tax in India, US dividend tax, Form 67 and RSU tax cover each schedule.

Caveats

This post covers resident individuals. FAST-DS amounts are fixed by the scheme; for revised or updated returns, surcharge and interest under sections 234A/B/C are not modelled. Immovable property abroad is excluded from the ₹20 lakh carve-out. Cases already under scrutiny, reassessment or Black Money Act proceedings need specific advice.

Disclaimer: This is general information, not tax advice. Check your situation with a qualified tax professional.

References

1. FAST-DS 2026 – Frequently Asked Questions – Income Tax Department, Government of India 2. Foreign Assets of Small Taxpayers Disclosure Scheme 2026 – e-filing help and payment FAQ – Income Tax Department e-filing portal 3. Section 234-I – Fee for furnishing revised return of income – Income Tax Department 4. CBDT issued instruction to align threshold for initiation of prosecution proceedings under BMA – EY India 5. India: Union Budget 2026 – Foreign assets disclosure scheme (GMS Flash Alert 2026-037) – KPMG (Budget-stage background) 6. ITR-U 48-month window – CBDT extends updated return time – Taxmann 7. Income tax: ITR-U filing deadline extended to 48 months – Business Today 8. Budget 2026-27 proposes 12-month window to file revised income tax returns – LiveLaw (Budget-stage proposal) 9. Section 234I – fee on revised return – ClearTax