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Rupee slide, valuation rules put foreign asset disclosure scheme out of reach for many

By Sohail Khan 26 August 2026, 11:52 pm

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Business News›Markets›Forex›Forex News›Rupee slide, valuation rules put foreign asset disclosure scheme out of reach for many

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Synopsis

The rupee's depreciation and strict valuation rules hinder foreign income disclosure. A one-time voluntary disclosure window allows regularization of overseas assets up to one crore. However, many exceed this limit due to currency conversion dates and asset values. Taxpayers explore updated returns and disclosure schemes, risking misrepresentation claims. Clarification on valuation rules is needed for borderline cases and falling-value assets.

Reuters

The rupee's depreciation and strict valuation rules hinder foreign income disclosure. A one-time voluntary disclosure window allows regularization of overseas assets up to one crore.

Mumbai: The rupee's slide over the years, stern valuation rules, and amounts beyond the low stipulated cut-offs are deterring many who want to come clean on undisclosed foreign income and assets.

The one-time voluntary disclosure window, which opened on August 16, allows a person to regularise overseas stocks, properties, ESOPs, dividend, interest etc up to ₹1 crore on payment of 60% tax and penalty.

Thanks to the ₹1 crore cap, there's a temptation to split undisclosed income between an updated return and the FAST-DS scheme (by offering the excess over ₹1 crore to tax through the updated return while claiming the benefit of FAST-DS for the balance), said Harshal Bhuta, a chartered accountant. While this looks attractive given tax differential of up to 40%, along with immunity from penalty and prosecution, one risks the FAST-DS declaration being treated as void on grounds of misrepresentation or suppression of facts, leaving a taxpayer with no recourse in future, said Bhuta.

Also Read: Tax filers scramble to fix foreign asset disclosures: I-T portal data & SMS alerts prompt review of overseas holdings before July 31

Aimed at giving assessees a chance to correct genuine mistakes, the scheme allows declaration of upto ₹5 cr foreign assets acquired with tax-paid money by residents using the liberalised remittance scheme or returning NRIs who missed declaring foreign accounts. But valuation rules can produce curious result.

For several foreign assets, the value is broadly the higher of acquisition cost and market value. "If an overseas asset bought for ₹5.25 crore is today worth only ₹3 crore, its value for the scheme may still remain ₹5.25 crore. The taxpayer could therefore fall outside the scheme," said advocate Priyanshi Chokshi.

Where the prescribed valuation is not done, indexed cost of acquisition is the deemed fair market value. Consider a property bought for ₹4 crore is now worth ₹3.5 crore, while its indexed cost is ₹5.2 crore. Here, the indexed cost pushed the taxpayer beyond the ₹5 crore limit. "In borderline cases, valuation is not merely a compliance exercise. It could decide eligibility itself. Some clarification on falling-value assets and borderline cases would help," said Chokshi.

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