"FADS 2026 Form 3 Is Now Live: A Simple Guide for NRIs and Returning Indians"

By NRITAX.AI Editorial Team, NRI Tax Education & AI-Assisted Tax Guidance · Published 2026-10-26

FADS 2026 Form 3 Is Now Live: A Simple Guide for NRIs and Returning Indians

*Last updated: 26 October 2026 · 6-minute read*

Quick answer

FAST-DS 2026 (Foreign Assets of Small Taxpayers Disclosure Scheme, 2026), also commonly referred to as FADS 2026, lets eligible taxpayers declare certain unreported foreign assets or income and settle them by paying the prescribed amount. The Income Tax Department has enabled Form 3 online. Form 3 is the payment intimation—not the first step. You start with Form 1, which must be filed by 31 December 2026.

In brief: eligible Category 1 declarations involving undisclosed foreign assets or income up to ₹1 crore are subject to tax and an equal additional amount (an effective 60%). Eligible Category 2 declarations involving explained-source assets omitted from the relevant ITR schedule, up to ₹5 crore, are subject to a fixed ₹1 lakh fee. Eligibility and the applicable category depend on the facts and scheme rules.

FADS 2026 at a glance

Item Detail

Full name Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 Legal basis Chapter IV, Finance Act, 2026 Window opened 16 August 2026 Last date for Form 1 31 December 2026 Valuation date 31 March 2026 Category 1 limit and cost Up to ₹1 crore; 30% tax plus an equal additional amount (effective 60%) Category 2 limit and cost Up to ₹5 crore; fixed fee of ₹1 lakh Protection Specified immunity under the Black Money Act, 2015, subject to the scheme's conditions Latest update Form 3 (payment intimation) is available online

What is FADS 2026?

FADS 2026 is a limited-time scheme intended to address certain gaps in the reporting of foreign assets or foreign income in India. It was introduced through Chapter IV of the Finance Act, 2026.

The scheme distinguishes between two broad situations:

The asset or income was not disclosed. For example, a foreign asset was acquired using funds whose source cannot be explained, or foreign income taxable in India was not reported.
The source of funds can be explained, but the asset was omitted from the relevant ITR schedule. For example, an asset may have been acquired with income earned while the individual was non-resident or with income already taxed in India.

These situations may be treated differently and have different limits and costs. Do not select a category based on the headline fee alone; check the eligibility conditions and the facts of your case.

Does FADS 2026 apply to you? Four situations to review

Living abroad does not, by itself, determine your Indian tax position. Equally, having a foreign account does not automatically mean you have a disclosure issue. Relevant facts may include when the income arose, when the asset was acquired, how it was funded, and your Indian tax-residency status in the relevant year.

1. You returned to India with overseas savings

You worked abroad, returned to India, and still hold foreign bank accounts, investments, or insurance. If these assets were acquired using income earned while you were non-resident but were later omitted from a required ITR schedule, review whether Category 2 could apply. Your facts and the scheme's conditions must be checked before reaching a conclusion.

2. You hold shares from a foreign employer

ESOPs, RSUs, and other foreign equity can be overlooked when an employee changes countries or becomes an Indian tax resident. Separate the source and tax treatment of the compensation, any income generated by the shares, and the reporting obligations for each relevant year.

3. You kept a bank or investment account abroad

Former students and overseas workers sometimes leave accounts open after moving. The existence of an account alone does not establish that FADS is required. Review the account history, source of funds, interest or other income, and the reporting rules applicable to each year.

4. You missed foreign income in your Indian return

If foreign income was taxable in India and was not reported, that is different from omitting an asset funded with income that was already taxed or earned while non-resident. Category 1 may be relevant in some cases, but eligibility should be confirmed under the official scheme rules.

Who may be eligible—and what needs checking?

Your status in the relevant year may matter more than your status today. The scheme's eligibility conditions need to be assessed against the year in which the foreign income arose or the asset was acquired, along with the other prescribed requirements.

The original guidance for this article describes the scheme as potentially covering:

A person who was resident in India for the relevant previous year.
A person who is now an NRI or RNOR but was resident in India in the year the foreign income arose or the asset was acquired.

The original guidance also identifies the following as potential exclusions:

Assets or income that are proceeds of crime where proceedings under the Prevention of Money Laundering Act (PMLA) have started or are pending.
Assessment years for which assessment under the Black Money Act has already been completed.

This is not a complete eligibility test. Confirm the current official scheme rules and obtain professional advice before filing a declaration.

Category 1 vs Category 2: limits and amounts payable

The difference between the two categories can be substantial, so the source of funds and the nature of the reporting omission need careful review.

Detail Category 1 Category 2

Broad situation Undisclosed foreign assets or undisclosed foreign income Explained-source assets omitted from the relevant ITR schedule Source of funds Unexplained, or income that was not taxed as required Explained, such as income earned while non-resident or income already taxed, subject to the scheme rules Aggregate limit ₹1 crore ₹5 crore Amount payable 30% tax plus an equal additional amount (effective 60%) Fixed fee of ₹1 lakh

Assets are valued as of 31 March 2026, using the valuation rules prescribed for each asset type. For a foreign bank account, the value is generally based on the aggregate deposits made from the account-opening date through 31 March 2026—not merely the closing balance on that date. Deposits representing a redeposit of money withdrawn from the same account are excluded to avoid double counting. A special rule may apply where the account was previously declared under Chapter VI of the Black Money Act, 2015 and the required tax and penalty were paid; in that case, qualifying deposits made after that declaration are considered. Retain account statements and reconcile withdrawals and redeposits before estimating the scheme threshold. The figures above are a summary, not a calculation of your personal liability.

Foreign-currency conversion is a separate step from valuing the asset. The Income Tax Department's FAST-DS FAQ states that a currency designated by the RBI under the Foreign Exchange Management (Deposit) Regulations, 2016 is converted into INR using the RBI reference rate on the valuation date. For a currency that is not so designated, the FAQ specifies first converting it into US dollars using the rate specified by the foreign country's central bank—or, failing that, another regulated bank—and then converting the US-dollar amount to INR at the RBI reference rate on the valuation date. Do not assume that SBI's Telegraphic Transfer (TT) Buying Rate is the FAST-DS method; follow the scheme's rules and the Department's current guidance for the asset or income being declared.

How to file under FADS 2026: Forms 1 to 4

Form 3 is not the first form. It is filed after the declaration and payment steps.

File Form 1. Declare the qualifying foreign assets or income by 31 December 2026.

Receive Form 2 from the Income Tax Department. Form 2 communicates the amount payable. The original guidance describes the order as generally due within one month from the end of the month in which Form 1 was filed.

Pay the amount specified using Challan ITNS 289. On the Income Tax Department e-Filing portal, select the FAST-DS payment option and carefully verify the PAN and challan details. The prescribed major heads are 0020 (Corporation Tax) and 0021 (Income Tax other than Companies); the minor heads are 115 for Corporate PAN and 116 for Non-Corporate PAN. The portal pre-fills Assessment Year 2026–27 for scheme payments. The Department states that a payment made under an incorrect minor head cannot be corrected or refunded, so verify the details before submitting payment. Follow the deadline in Form 2: payment is generally due within two months from the end of the month in which Form 2 is received. The rules allow a limited further period with interest, subject to the prescribed conditions; missing the outer payment limit may cause the declaration's scheme benefit to cease.

File Form 3. Submit the payment intimation with proof of payment online. The original guidance describes the filing window as within four months from the end of the month in which Form 2 was issued. Form 3 is the form now available online. Submit it after payment through ITNS 289, attaching proof of payment.

Receive Form 4 from the Income Tax Department. Form 4 is the certificate confirming the declaration and payment. The original guidance describes it as generally due within one month from the end of the month in which Form 3 was filed.

These are general timelines, not a substitute for the official rules or the dates specified in your actual order. Check the latest Income Tax Department guidance before acting.

Does FADS 2026 provide protection from penalties or prosecution?

The scheme provides specified immunity only to the extent permitted by its provisions and for matters covered by a valid declaration and payment. It should not be treated as blanket protection for every foreign asset, tax issue, or past reporting omission.

The declaration must meet the scheme's requirements, use the correct category, be paid in full, and remain within the scheme's scope. Get a qualified tax professional to review your circumstances if there is any uncertainty.

Pre-filing checklist

Use this checklist to organise your records before discussing eligibility or filing:

[ ] Residency history: Your Indian tax-residency status for each relevant year.
[ ] Source of funds: How each asset was funded, and whether the relevant income was taxed or earned while you were non-resident.
[ ] Supporting records: Bank and investment statements, ESOP/RSU records, property documents, and income calculations.
[ ] Past ITRs: Whether the assets and income were reported in the required schedules.
[ ] Valuation and currency conversion: Calculate each asset's value as of 31 March 2026 using the prescribed asset-specific method. For a foreign bank account, reconcile aggregate deposits since account opening and exclude qualifying redeposits of withdrawals from that same account. Then convert the value to INR using the FAST-DS currency conversion mechanism described in the official FAQ; do not substitute the SBI TT Buying Rate without confirming that it applies to the specific item under the scheme rules.
[ ] Category and limits: Whether the relevant category and its ₹1 crore or ₹5 crore aggregate limit may apply.
[ ] Exclusions: Whether any statutory exclusions or relevant proceedings apply.
[ ] Deadlines: A plan for payment and Form 3 after Form 2 is received.

Mistakes to avoid

Filing Form 3 first. Form 1 comes first.
Looking only at your current NRI status. Review your status and circumstances for the relevant year.
Choosing a category based only on the fee. The source of funds and the nature of the omission matter.
Assuming every foreign account requires a declaration. Review the reporting obligations and scheme eligibility first.
Missing the payment deadline after Form 2. This may invalidate the declaration.
Assuming immunity is automatic. It depends on satisfying the scheme's conditions.

FADS 2026: Frequently asked questions

What is the last date to file under FADS 2026?

The date stated in the source guidance is 31 December 2026 for Form 1. Confirm the deadline against the latest official Income Tax Department guidance before filing.

Is Form 3 the first form to file?

No. The sequence described is Form 1, Form 2 from the Department, payment, Form 3 with proof of payment, and then Form 4 from the Department.

Can an NRI apply for FADS 2026?

Potentially, depending on the scheme's eligibility conditions and the person's circumstances in the relevant year. Current NRI or RNOR status alone does not settle eligibility.

How much is payable under FADS 2026?

The source guidance describes Category 1 as 30% tax plus an equal additional amount (effective 60%) and Category 2 as a fixed ₹1 lakh fee. The applicable category and amount must be confirmed under the official rules.

Which exchange rate should I use for a foreign-currency asset?

Do not automatically use the SBI TT Buying Rate. The Income Tax Department's FAST-DS FAQ says that currencies designated by the RBI under the Foreign Exchange Management (Deposit) Regulations, 2016 are converted at the RBI reference rate on 31 March 2026. For other currencies, it describes conversion into US dollars at the specified rate of the foreign country's central bank (or, failing that, another regulated bank), followed by conversion into INR at the RBI reference rate. Check the current official FAQ and the applicable rule for the particular asset or income before filing.

What is the maximum value covered?

The source guidance states aggregate limits of ₹1 crore for Category 1 and ₹5 crore for Category 2, with valuation as of 31 March 2026. Confirm the valuation and eligibility rules for your asset type.

I forgot to report foreign RSUs or ESOPs. Could FADS help?

Possibly, but it depends on the source and tax treatment of the compensation, the shares and any income they generated, your residency history, and the scheme's conditions. Have the facts reviewed before choosing a category.

What happens if I miss the payment deadline?

The source guidance states that missing the applicable payment window may invalidate the declaration. Follow the deadline in Form 2 and the current official rules.

Does FADS 2026 give full immunity from prosecution?

No. Any immunity is limited to what the scheme expressly provides and to matters covered by a valid declaration and payment.

Where can I check the official rules?

Check the official Income Tax Department e-Filing portal and the latest FADS 2026 FAQs, forms, and user manual. Do not rely on a secondary summary alone for a filing decision.

Final takeaway

Form 3 becoming available matters if you are following the FADS 2026 process, but it is not the first step. Start by reviewing how each foreign asset was funded, your tax-residency status in the relevant year, and whether the asset or income was reported correctly. Confirm eligibility, category, valuation, and deadlines against the official rules—and seek qualified advice when the facts are unclear.

NRITAX.AI — helping NRIs make sense of cross-border tax compliance.

Optional next step: NRITAX.AI

If you would like help organising your residency history, foreign-asset records, or questions to raise with a tax professional, you can explore these NRITAX.AI resources:

Yukti AI: Chat with Yukti AI
Tax expert: Book a tax-expert consultation

Yukti AI can help you organise questions and understand general concepts; it does not replace a professional review of eligibility or a filing decision.