FinMin eases reporting rules for FATCA

The finance ministry has eased certain rules in reporting by financial institutions to comply with an agreement between India and the US for implementing the Foreign Account Tax Compliance Act (FATCA).

Financial institutions had told the government it was difficult to take physical self-certification from the subscribers. Heeding to the complaint, the ministry allowed obtaining of self-certification through internet banking platform.

The ministry also did away with the requirement of TIN number if a person is in a country where that number is not provided.

There were also queries from financial institutions about valuation of custodial accounts maintained with depositories. The ministry clarified that valuation of securities might be done at the values regularly communicated by depositories to the depository participants and brokers.

"Hopefully, this should help reporting of unlisted securities," said Bahroze Kamdin, partner, Deloitte Haskins & Sells.

FATCA requires foreign financial institutions (FFI) to report information about financial accounts held by US taxpayers. If the FFI does not comply, the IRS can impose a 30 per cent withholding penalty on US payments made to the FFI.