The Finance Ministry has come up with
rules for information reporting under
the Foreign Account Tax Compliance Act
(FATCA), spelling out the timelines that
the entities have to comply with the
new requirements.
The new rules are significant as these
also provide reporting timelines for OECD’s
Common Reporting Standard (CRS),
which India signed on June 3 this year.
CRS sets out a standard basis for
automatic tax information exchange
between member countries (OECD and G20)
through respective bilateral tax treaties.
India is among the few countries that
have adopted a common approach for
implementation of FATCA and CRS.
Most advanced countries have first
adopted FATCA and are now adopting CRS.
The Central Board of Direct Taxes (CBDT)
move to notify the rules came just a month
after India and the US signed an
inter-governmental agreement (IGA) to
implement FATCA with a view to promoting
transparency between the two countries
on tax matters.
The IGA was seen as an important step on
part of India and the US to tackle offshore
tax evasion and avoidance.
As per the IGA, financial institutions in India
will be required to report tax-related
information relating to US account holders
directly to the Indian government, which will,
in turn, relay that information to the US.
The US will provide similar information
relating to Indian account holders in the US,
although the exchange of information is
not fully reciprocal at present.
The exchange of information on an automatic
basis is likely to begin by end of September 2015.
The new FATCA rules, which run into 61 pages,
prescribe the information to be maintained by
the reporting financial institutions in India.
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