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India has now been included in a list of 34 countries with which the US would automatically share information under the FATCA (Foreign Account Tax Compliance Act) regulations. This will bolster the Indian government’s efforts in tracking black money stashed in the US and bringing it back, tax experts said.
The US Treasury Department has now identified 16 new countries (including India) that have been added to an original list with which US already had automatic information sharing arrangement under FATCA law.
An executive order issued by the US Treasury Department lists out the 16 new countries including India. The other countries include Italy, France, Canada, Mauritius, Liechtenstein, Luxembourg, New Zealand, South Africa and Brazil.
Welcome move
This latest move is good news for the Indian government as it would be in a position to automatically receive information from the US about those Indian tax residents who are receiving “deposit interest” on accounts held by them in US banks and financial institutions, say tax experts.
Kriyang Karia, Associate Director, BDO India LLP, said that the US Treasury Department move to include India in the latest list of 16 countries shows US comfort over India maintaining confidentiality of the information exchanged with the Indian government.
“Post the latest move, information will automatically flow to Indian Government about Indian tax residents receiving interest incomes on accounts maintained in US,” Karia told BusinessLine .
As of now, under FATCA, the US is obliged to share only interest payment related information with the Indian side.
On its part, India is currently required to share information around the account value (balances) maintained by US citizens in Indian banks and custodians (value of securities’ balances) besides the gross sale proceeds in a year.
Inter govt pact
Information around interest, dividend payouts made to US citizens would also need to be provided under the Inter-Governmental agreement signed with the US earlier this year.
The first leg of reporting by Indian financial institutions under FATCA ended on September 10. The second leg of reporting by the Indian side is due on March 31, 2016 (for calendar year 2015).
Amit Maheshwari, Partner, Ashok Maheshwary & Associates, a chartered accountants firm, said there was need for financial institutions and banks in India to create robust data capturing mechanisms to comply with FATCA.
“The inclusion of India in the list of countries underscores the importance of creating robust data capturing mechanisms by financial institutions here,” he said.
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