FAST-DS 2026 Valuation Rules: How to Value Each Foreign Asset for Form 1 (Bank Accounts, Shares and Property)
Quick Summary: How FAST-DS 2026 Values Each Foreign Asset
- The valuation date is fixed at 31 March 2026 for every asset in a FAST-DS declaration, whatever the actual date you acquired or held it. Rule 2(1)(e) of the Foreign Assets of Small Taxpayers Disclosure Scheme Rules, 2026 sets this and it is not adjustable.
- Every foreign-currency value is converted using the RBI reference rate on 31 March 2026. Not the rate on the acquisition date, not the year-end book rate, the RBI reference rate on the valuation date.
- The default fair market value for most assets is “the higher of cost or open-market value”, but there is a critical escape hatch: if you do not obtain an open-market valuation from a recognised valuer, the indexed cost of acquisition is deemed to be the fair market value. That single proviso decides whether you need a foreign valuer at all.
- A foreign bank account is valued as the sum of every deposit ever made into it from the day it opened up to 31 March 2026, not the closing balance. Re-deposits of your own earlier withdrawals are excluded, and if you already declared the account under the Black Money Act, only deposits since that declaration count.
- There is a 20 percent variance safe harbour under Rule 5(2). For assets other than a bank account, if your declared value later turns out to be lower than the Assessing Officer’s figure, the declaration is not treated as void so long as the shortfall does not exceed 20 percent of the value you declared.
This post is the valuation manual for FAST-DS 2026. It assumes you have already decided that a client is eligible and which of the two disclosure baskets applies. If you have not, start with the eligibility and economics piece, FAST-DS 2026: How to Declare Undisclosed Foreign Assets Before December 31, 2026, which explains the Rs 1 lakh flat fee basket versus the 60 percent basket and who qualifies. Here we deal only with the harder, less glamorous question: once you are filing, what number goes in Form 1 for each asset.
Why Valuation Is the Real Work in a FAST-DS Filing
Filling Form 1 takes an afternoon. Arriving at a defensible value for each asset, and being able to evidence it, is the engagement. The scheme opened on 16 August 2026 and closes on 31 December 2026, and the number you declare drives the cost of the entire disclosure. Get the valuation method wrong and you either overpay, or you understate and risk the declaration being treated as void. The Rules give a precise, asset-class-by-asset-class method under Rule 3, and the professional value is in applying it correctly and keeping the working papers that support it.
The Rule 3 Valuation Table: Every Asset Class at a Glance
Rule 3 determines fair market value for the purposes of clause (l) of sub-section (1) of section 131 of the Finance Act, 2026. The pattern repeats: for most assets the value is the higher of cost and open-market value on 31 March 2026, and if no open-market valuation is done, indexed cost of acquisition is deemed to be the fair market value.
| Asset class | Fair market value under Rule 3 | Fallback if no valuation obtained |
|---|---|---|
| Bullion, jewellery, precious stones | Higher of cost, or open-market price on 31 March 2026 per a valuer recognised by the foreign government or its agency | Indexed cost of acquisition |
| Archaeological collections, drawings, paintings, sculptures, works of art | Higher of cost, or open-market price on the valuation date per a recognised foreign valuer | Indexed cost of acquisition |
| Quoted shares and securities | Higher of cost, or the average of the lowest and highest quoted price on the valuation date (or the last trading day if no trade on 31 March 2026) | Not applicable, use the quoted-price rule |
| Unquoted equity shares | Higher of cost, or the net-asset-value formula below | Indexed cost of acquisition |
| Unquoted shares and securities other than equity | Higher of cost, or open-market price on the valuation date per a recognised foreign valuer | Indexed cost of acquisition |
| Immovable property | Higher of cost, or open-market price on the valuation date per a valuer recognised in the country where the property is located | Indexed cost of acquisition |
| Bank account | Sum of all deposits from account opening to 31 March 2026 (see the detailed rule below) | Not applicable, deposit-sum rule governs |
| Interest in a firm, association of persons or LLP | Net asset of the entity on the valuation date, apportioned to the partner or member | Per the entity rule |
| Any other asset | Higher of cost, or open-market arm’s-length price on the valuation date | Indexed cost of acquisition |
Note the definitional point that trips people up: “indexed cost of acquisition” here carries the same meaning as in section 48 of the Income-tax Act, 1961, per Rule 2(1)(b). You compute it exactly as you would for capital gains under the old Act.
The Open-Market Value Versus Indexed-Cost Decision
For six of the nine asset classes the same choice arises: do you commission an open-market valuation from a recognised foreign valuer, or do you let the indexed cost of acquisition stand as the deemed fair market value. This is a real modelling decision with cost and risk on both sides.
- Open-market valuation gives the true current worth, which matters where the asset has appreciated far beyond cost only if you want the lower number. But you rarely want the higher number in a disclosure, so an appreciated asset usually points away from a fresh valuation.
- Indexed cost of acquisition is deemed to be the fair market value the moment you choose not to obtain a valuation. For a long-held, appreciated asset the indexed cost is almost always lower than current market value, so declining the valuation is frequently the cheaper and simpler route, and it removes the need to find and pay a recognised foreign valuer.
Model both figures for every appreciated asset before deciding. In most small-taxpayer cases the indexed-cost fallback wins on both cost and value, but a depreciated asset, or one bought recently, can make the open-market figure the lower of the two. There is no single right answer, which is exactly why this is professional work.
The Foreign Bank Account Rule, Worked Through
The bank account is the asset most people value wrongly, because instinct says “the balance”. The Rules say otherwise. Under Rule 3(e), the value of a bank account is:
- The sum of all deposits made into the account from the date it was opened up to 31 March 2026; or
- where the account was already declared under Chapter VI of the Black Money Act, the sum of deposits made since the date of that declaration.
Two adjustments matter. First, a deposit that is made from the proceeds of an earlier withdrawal from the same account is excluded, so churning your own money in and out does not inflate the value. Second, the whole figure is a lifetime-deposit total, not a snapshot, so an account with a small closing balance but decades of turnover can carry a surprisingly large declared value. The gazette illustrates this with a foreign account opened in 2010: after netting out re-deposits, the value settles at a figure well below the gross deposits but well above the closing balance, and that United States Dollar figure is then converted into rupees at the RBI reference rate on 31 March 2026.
The practical instruction: pull the entire statement history from account opening, not just the last year, tag every deposit that is a re-deposit of an earlier withdrawal, and keep that reconciliation as your working paper. This is the single most evidence-heavy computation in a FAST-DS filing.
The Unquoted Equity Share Formula
Founders and professionals who hold shares in a foreign private company face the net-asset-value formula. The fair market value of an unquoted equity share is the higher of its cost of acquisition, or the amount produced by:
Fair market value per share = (A + B – L) x (PV / PE)
where, reading the definitions in Rule 3(c)(ii):
- A = book value of all assets in the balance sheet, other than bullion, jewellery, precious stones, artistic work, shares, securities and immovable property, reduced by net income-tax paid (tax paid less refund claimed) and by any fictitious assets such as unamortised deferred expenditure that do not represent the value of any asset.
- B = the fair market value of the bullion, jewellery, precious stones, artistic work, shares, securities and immovable property held by the company, valued under this same Rule 3.
- L = book value of liabilities, but excluding paid-up equity capital, amounts set apart for dividends, reserves and surplus, excess tax provisions, provisions for unascertained liabilities, and contingent liabilities.
- PE = total paid-up equity share capital shown in the balance sheet.
- PV = the paid-up value of the specific shares being valued.
If you do not carry out this computation, the indexed cost of acquisition is again deemed to be the fair market value. For a small holding in an early-stage foreign company where the net-asset formula would produce a high number, the indexed-cost fallback can once more be the sensible choice, provided you can support the acquisition cost.
The 20 Percent Variance Safe Harbour Under Rule 5(2)
This is the protection that makes an honest, well-documented valuation safe to file. Rule 5(2) provides that where the value of an asset, other than a bank account, declared in Form 1 is at variance with the value later determined by the Assessing Officer or any other income-tax authority during an assessment or inquiry, the declaration is not treated as void on account of that variance, provided the variance does not exceed 20 percent of the fair market value you declared.
Read that carefully, because it is a shield, not a licence. It means a genuine, defensible valuation that turns out to be modestly lower than the officer’s figure does not blow up the declaration. It does not protect a bank account, which has its own precise deposit-sum rule and no tolerance band, and it does not protect a value pulled from the air. The way to earn the safe harbour is to compute each non-bank asset properly, document the method, and keep the valuer’s report or the indexed-cost working. A 20 percent buffer on a documented number is comfortable. A 20 percent buffer on a guess is not.
Documentation Checklist for Each Asset
- Every asset: a note recording whether you used cost, open-market value or the indexed-cost fallback, and why.
- Bullion, art, immovable property, unquoted non-equity securities: either the recognised foreign valuer’s report as at 31 March 2026, or the indexed-cost computation under section 48 of the 1961 Act.
- Quoted securities: the exchange price sheet showing the lowest and highest quote on 31 March 2026, or the last trading day before it.
- Unquoted equity shares: the audited or management balance sheet used for A, B, L, PE and PV, plus the Rule 3 valuations feeding B.
- Bank account: the full statement from account opening, the re-deposit reconciliation, and any earlier Black Money Act declaration date.
- Currency: the RBI reference rate on 31 March 2026 used for every conversion.
Frequently Asked Questions
Which date do I use to value my foreign assets for FAST-DS?
The valuation date is 31 March 2026 for every asset, set by Rule 2(1)(e), regardless of when you acquired or disposed of the asset. All foreign-currency amounts are converted to rupees at the RBI reference rate on that date.
Do I have to hire a foreign valuer for my overseas property?
No. You can, and you would get the open-market value on 31 March 2026 from a valuer recognised in the country where the property sits. But if you choose not to, the indexed cost of acquisition is deemed to be the fair market value. For a long-held, appreciated property that fallback is usually both cheaper and lower, so many filers will not need a valuer at all.
Is my foreign bank account valued at its closing balance?
No. It is valued at the sum of every deposit made from the day the account was opened up to 31 March 2026, excluding deposits that are simply re-deposits of your own earlier withdrawals. If you had already declared the account under the Black Money Act, only deposits made after that declaration count. The closing balance is irrelevant to the computation.
What happens if the Assessing Officer values my asset higher than I declared?
For any asset other than a bank account, Rule 5(2) protects the declaration provided the variance does not exceed 20 percent of the value you declared. Beyond 20 percent, the declaration can be treated as void on account of the variance, which is why a documented method matters. The bank account has no such tolerance band and must be computed on the deposit-sum rule exactly.
Does the FAST-DS valuation affect my regular Schedule FA reporting?
They are separate exercises. FAST-DS is a one-time disclosure valued on the fixed 31 March 2026 date under Rule 3. Your ongoing Schedule FA obligation continues on its own basis. If you want to understand how foreign assets are now surfacing in your AIS through AEOI data, read Foreign Assets Now Appear in Your AIS: How to Reconcile AEOI Data and Schedule FA.
The Bottom Line
The economics of FAST-DS are decided by eligibility and the basket. The cost is decided by valuation. For most small taxpayers the winning pattern is the indexed-cost fallback on appreciated assets, the precise deposit-sum computation on bank accounts, and a clean set of working papers that earns the 20 percent variance safe harbour on everything else. Do that asset by asset, keep the evidence, and Form 1 becomes the easy last step rather than the risky one. The window closes on 31 December 2026, and the valuation work, not the filing, is what takes time.
Working through a client’s foreign asset schedule and unsure whether to value on cost, market or the indexed-cost fallback? Schedule a strategy session with Tax Update India and get the asset-by-asset valuation approach settled before you commit a number to Form 1.
Disclaimer: This post is a general explanation of the valuation rules in the Foreign Assets of Small Taxpayers Disclosure Scheme Rules, 2026 (CBDT Notification No. 114/2026, G.S.R. 732(E) dated 14 August 2026) and is for information only. It is not legal or tax advice. The operative text is the notified Rules and the parent scheme in Chapter IV of the Finance Act, 2026. Verify each computation against the Rules and take professional advice before filing Form 1.
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