The government is likely to soon sign an agreement with the US government to ensure banks here comply with a US law of 2010, aimed to ensure the latter's nationals pay their full share of taxes.
Termed the Inter Governmental Agreement for the Foreign Account Tax Compliance Act, it targets Americans living abroad. The latter law, passed by the American legislature, tries to get financial institutions in other countries to report to the US authorities all accounts held by Americans.
Akhilesh Ranjan, joint secretary (foreign tax and tax research) in the finance ministry, said on Thursday the government is committed to ensuring confidentiality of the data in question and was taking measures in that direction. At a discussion organised by the Federation of Indian Chambers of Commerce and Industry, he said a committee has been set up within the Central Board of Direct Taxes, headed by the chief information security officer, in this regard. Systems were being devised so that information distribution is channelised.
Fatca compliance will necessarily have to cover all new accounts opened by Indian financial institutions. They'd have to share data with the government in respect of all new accounts, to enable the government to share this data with the US by end-September.
Currently, American citizens have to report all financial transactions done in India to the CBDT. Concurrently, all financial transactions done by Indian citizens in the US have to be reported to their Inland Revenue Service.
