Under the Intergovernmental Agreement (IGA) signed between India and the USA, financial institutions are required to undertake due diligence and reporting requirements in accordance with the Foreign Account Tax Compliance Act (FATCA) Law.
The IGA entered into force on 31 August 2015. Rule 114H(8) of the Income Tax Rules, 1962 provided that for all accounts opened from 1 July 2014 to 31 August 2015, self-certification from the account holders should be obtained by 31 August 2016. Considering the practical difficulties faced by the taxpayers, the Central Board of Direct Taxes (CBDT) announced that the timeline of 31 August 2016 will be relaxed and revised timelines for undertaking this compliance will be notified.
The CBDT in a recent press release1 has announced that the last date for obtaining self-certification from account holders is 30 April 2017. This timeline applies to accounts opened between 1 July 2014 and 31 August 2015. If a customer fails to provide the self-certification by 30 April 2017, the customer account will be blocked. This would mean that the financial institution will prohibit the account holder from effecting any transaction with respect to such accounts. Once the self-certification documents are obtained and the due diligence procedures are completed, the customer will be able to carry out transactions through his account.
Footnotes
1 Issued on 11 April 2017
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