Providing relief to financial institutions and their account holders, the government today indefinitely extended the deadline for complying with self-certification norms under FATCA provisions.
After the cut-off, which was due to expire today, accounts with financial institutions that have not been self-certified would have faced closure.
The relaxations came after the stakeholders highlighted various difficulties while meeting the requirement.
In view of the same, India and the US are discussing alternative procedures with a view to adjusting them to allow a few months of extension for completing due diligence and not requiring account closure within one year of entry into force of the agreement (August 31, 2016), the finance ministry said in a statement.
The Inter-governmental Agreement (IGA) with the US for implementation of the Foreign Accounts Tax Compliance Act (FATCA) came into force on August 31, 2015.
“For providing immediate relief to account holders and in wider public interest, it has been decided that the financial institutions may not close the accounts by August 31, 2016, in respect of which self-certifications have not been obtained under the alternative procedure,” it stated.
The revised timelines for completing due diligence in respect of such accounts will be notified in due course.
In the interim, the ministry said the financial institutions should continue to work on completing the required due diligence, including obtaining self-certifications.
Under the alternative procedure in income-tax rules, the financial institutions need to obtain self-certification and carry out due diligence to determine the reasonableness of the self-certification in respect of all individual and entity accounts opened from July 1, 2014 to August 31, 2015.
Such self-certification and documentation are to be obtained by the financial institutions by August 31, 2016.
Otherwise, they are required to close the account and report the same if (it is) found to be a “reportable account” as per the prescribed due diligence procedure for the pre-existing account.
FATCA allows automatic exchange of financial information between India and the US.