India, along with a group of countries, has got one more month’s time from the US to sign the Foreign Account Tax Compliance Act (FATCA). Not signing this pact would lead to a withholding tax of 30 per cent on any fund transfer to India.

“The US has given a month’s extension to India and some other counties to sign FATCA,” Revenue Secretary Shaktikanta Das said on the sidelines of an event here on Friday, adding that the Finance Ministry will seek the Cabinet’s nod before signing it. The initial deadline set by the US for signing the pact was December 31.

Under FATCA, the US will sign an Inter-governmental Agreement (IGA) for sharing information with various countries, including India, where American individuals and companies have accounts and other assets. Under the pact, the exchange of information will be subject to a confidentiality clause.

The US treasury had released two formats of IGA-Model 1 and Model 2. In Model 2, financial institutions will report information directly to the US IRS rather than their local jurisdictions. Recently, referring to FATCA, Finance Minister Arun Jaitley had said the Reserve Bank has cautioned the government of serious consequences in case India fails to comply with the American legislation. “The consequences of not signing the agreement with US under FATCA would be disastrous. It will negate the efforts being undertaken by our government to revive the Indian economy,” he had said.

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