‘No need of reporting fixed deposits in pre-existing accounts’

New Delhi, Feb 19 (IANS) The Indian government clarified on Friday that the implementation of the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS) will not entail reporting of all fixed deposits and auto sweep facilities in pre-existing savings bank accounts.

“During stakeholders consultations, representatives of financial institutions informed that in such cases, no additional documentation is obtained for these fixed deposits accounts as they are intrinsically related to existing saving bank account and all KYC documents are available for the existing saving bank account,” the Central Board of Direct Taxes said on their website.

As per the order, fixed deposits in savings accounts opened before June 30, 2014 and December 31, 2015 will not have to be reported for FATCA and CRS, respectively.

The guidelines also said that for the upcoming reporting in March 2015 and May 2016, all reporting has to be done in Indian currency. For the reporting in 2017, Form 61B and Schema will be suitably modified to include a field for capturing the type of currency.

India and the US signed an inter-governmental agreement to implement FATCA in July 2015, towards greater transparency between the two countries on tax matters.

The decision will enable the government to receive information from the US and from other jurisdictions with which India has entered into agreements for Automatic Exchange of Financial Account Information (AEOI) as per CRS about assets of Indians held abroad including through entities in which Indians are beneficial owners.

These steps are designed to help the government curb tax evasion and deal with the problems of black money.

The measures will also result in financial institutions in India being FATCA complaint and they will not be required to enter into separate agreements with the US to avoid 30 percent withholding on their US source of income.

Till now, the Automatic Exchange of Financial Account Information protocols as per common reporting standards have been signed by 52 countries.

The Indian government has taken a leading role in international fora towards building a consensus among major economies that the problem of offshore tax evasion and flow of illicit money can be addressed only by free flow of financial account information to be exchanged among countries on an automatic basis.

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