‘A/cs can be blocked if not FACTA compliant’

Our Bureau New Delhi | Updated on January 15, 2018

The Finance Ministry has said that accounts of those individuals who do not provide self-certification by April 30 to comply with Foreign Account Tax Compliance Act (FATCA) provisions would be blocked.

“This would mean that the financial institution would prohibit the account holder from effecting any transaction with respect to such accounts,” said the Central Board of Direct Taxes on Tuesday, adding that transactions in such accounts would be permitted only after the self-certification is obtained and due diligence completed. The Inter-Governmental Agreement (IGA) with the US for implementation of FATCA came into force on August 31, 2015. Under the alternative procedure provided in Rule 114H (8) of the Income-tax Rules, 1962, the financial institutions have to obtain self-certification and carry out due diligence in respect of all individual and entity accounts opened between July 1, 2014 and August 31, 2015.

This was required to be done by August 31 last year, failing which the accounts would be closed.

But due to difficulties faced by stakeholders, the tax department had on August 31, 2016, indefinitely extended the deadline for complying with self-certification norms.

Under the FATCA provisions, which aim to counter tax evasion by US taxpayers who use of offshore accounts to park money otherwise taxable in the US, financial institutions such as banks have to get self-certification and documentation from account holders.

Failing this, they were required to close the accounts and report the same if found to be a “reportable account” as per the prescribed due diligence procedure for a pre-existing account.

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Published on April 11, 2017
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