On Tuesday, the Income Tax Department has issued to all banks and Financial institutions that all the account holders need to provide self certification. This will include the non resident Indians who have their accounts in India. This will be applicable to all the accounts that have been created between July and August in 2014-15 financial year. The end date for the self certification is April 30, 2017.
The order also says that according to Foreign Account Tax Compliance Act (FATCA,) if the norms are violated the accounts will be blocked until self confirmation.
What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) requires that foreign financial Institutions and other non financial foreign entities must submit a report on the foreign assets that are held by the U.S., account holders. These will also be subject to withholding on withhold able payments. The Indian FI’s once after collecting the information about the account holders will pass it on to the U.S., government. The American authorities, in turn, will validate the financial assets of the account holder.
What is the Statement?
The Central Board of Direct Taxes (CBDT) issued a statement saying that, “The account holders may be informed that, in case self certifications are not provided till April 30, 2017, the accounts will be blocked, which will mean that the financial institution will prohibit the account holder from effecting any transaction with respect to such accounts.”
The U.S., authorities and the Indian Government have made an agreement for the implementation of FATCA. The new accounts already have to know your customer norms, but as the accounts in between 2014-15 do not have this clause it has become mandatory for self certification. The Income Tax department, however, has said that the deadline date might be extended depending on the necessity.
The Inter-Governmental Agreement (IGA) with USA for implementation of FATCA entered into force on 31st August 2015: pic.twitter.com/bVie7LY6lI
— Income Tax India (@IncomeTaxIndia) April 11, 2017
Account holders are informed that, in case self-certifications are not provided till 30.4.2017,A/Cs would be blocked : pic.twitter.com/YICvRHqfPm
— Income Tax India (@IncomeTaxIndia) April 11, 2017
