People who have opened their bank accounts between July 1, 2014 and August 31, 2015 will need to submit self-certification by April 30 to comply with FATCA (Foreign Account Tax Compliance Act) provisions. If anybody fails to do so then the accounts would be blocked, the Income Tax Department said.
“The account holders may be informed that, in case self-certifications are not provided till April 30, 2017, the accounts would be blocked, which would mean that the financial institution would prohibit the account holder from effecting any transaction with respect to such accounts,” the Central Board of Direct Taxes or CBDT said in a statement.
What does it mean to you?
Firstly, we need to understand what is Foreign Account Tax Compliance Act (FATCA) compliance.
Last year, India signed Inter-Governmental Agreement (IGA) with the US for automated exchange of information between the two countries, in order to improve the International Tax Compliance and implementing the FATCA.
Under this agreement, every Indian investor needs to provide an additional KYC and compliance form, apart from the regular KYC information, at the time of operating any financial or investment account.
Moreover, the individuals who have a demat account or just opened a new one and also making fresh purchases of mutual fund units or other investments like fixed deposits would now need a self-certification for these accounts.
What To Do?
Investors are required to provide details such as country of tax residence, tax identification number from such country, country of birth, country of citizenship etc.
If the accounts are blocked due to lack of self-certification, then transactions by the account holder in such blocked accounts will be permitted once the self-certification is obtained and due diligence is completed, the tax department said.