According to the new norm being imposed by the Indian banking system from May 1, 2017, all bank account holders, mutual funds, and insurance scheme investors are expected to compulsorily get their Foreign Account Tax Compliance Act (FATCA) compliance done or their accounts would be frozen.
According to the new norm being imposed by the Indian banking system from May 1, 2017, all bank account holders, mutual funds, and insurance scheme investors are expected to compulsorily get their Foreign Account Tax Compliance Act (FATCA) compliance done or their accounts would be frozen.
What is this norm and why is it required?
The FATCA is an agreement between the US and India to find assets and income held by citizens of the US in offshore accounts. FATCA, which was signed between India and the US works to find the deliberate tax evasion carried out by US citizens or residents in offshore accounts which is illegal as against tax avoidance which is legal in the US.
The agreement was signed between the two countries on July 9, 2015, and the initial deadline for all the aforementioned account holders to get the compliance done was August 2016 which was later extended to April 30, 2017, to give people more room to adhere.
Who is required to get FATCA compliance done?
Those persons that have opened their bank accounts, mutual funds accounts, or have invested in insurance schemes between July 1, 2014 and August 31, 2015, are required to get the compliance done by April 30, 2016.
What happens if I don't get FATCA compliance?
If you fail to get FATCA compliance done by April 30, 2017 (Sunday), any of your bank, mutual funds, or insurance investment accounts opened between the aforementioned dates will be frozen, which means you will not be allowed to carry out any transactions from those accounts even if there is money in it. As for mutual fund account holders, the investors will not be able to access the amount already invested in funds or carry out any new investments.
What do I need to file for FATCA compliance?
You will need to submit your PAN card details, occupation, country of birth, country of residence, gross annual income, and details of any political connections. You also need to provide your tax identification number if you have been paying taxes. The compliance needs to be done by individual and non-individual investors.
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