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The Finance Ministry has updated the Guidance Note on FATCA law and Common Reporting Standards (CRS) based on the comments and feedback received from various stakeholders.
The Foreign Account Tax Compliance Act (FATCA) has been the US’ answer to tax evasion by US taxpayers through use of offshore accounts to park money otherwise taxable in the US. India has been a signatory to FATCA since July 9 this year when the reciprocal version of Model 1 Intergovernmental Agreement (IGA) was signed with the US.
Under Model 1 IGA, the financial institutions report to appropriate local tax authorities and need not directly submit information to the US IRS.
The local government – the Indian Government – is responsible for collecting information from resident FIs and report to the US. IRS.
In exchange, the US will share information of the reportable Indian accounts (Indian tax residents having accounts with US FIs) with the Indian Government.
Common Reporting Standard (CRS) – released by OECD along with G-20 Countries – sets out a standard basis for automatic tax information exchange between member countries through respective bilateral tax treaties.
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