FATCA, Why Fatca Filing Requirement & Reporting Mandatory

What is FATCA

FATCA is Foreign Account Tax Compliance Act implemented, when India got into an Inter Government agreement with the United States which was on 31 August 2015. The FATCA does bring a platform to automatic exchange of financial information between the United States and India.

It is advised to all Indian financial institutions to share necessary information to tax authority of India, which may then share with USA. Records of financial transactions updated with the tax authority for financial benefits and also to track the investments.

FATCA filing requirement

As per the government guidelines, it requires to submit FATCA self-certification for subscribers who register on or after July 2014. Under Restore Employment Act, it required to report all the details of US taxpayers accounts to the internal revenue services by foreign financial institutions or non-financial institutions. Any case of tax evasion has also reported under Foreign Account Tax Compliance Act.

FATCA aims to ring transparency and limit tax evasion by individuals and the IR’s entitled to monitor the tax evasion. Since 2015, after agreement with India. Every NRI living in USA and investing in India required to self declare Foreign Account Tax Compliance Act.

The FATCA is applicable to both NRI and PIOs who works in US but not proper residence of the USA. Indian Investments such as National Pension Scheme, Fixed Deposits, Mutual Funds, Provident Fund, Stocks, Capital Gains, Bank Interest may self-declared in FATCA. The services monitored by an Indian agency to track the investments from investors at regular intervals.

FATCA Self Certification Consequences

There are numerous issues which may face by an individua. This doesn’t certify their NSDL account through the Foreign Account Tax Compliance Act.

For a Bank Account Holder outside India, the self-certification is mandatory. In case Foreign Account Tax Compliance Act self-certification failed, the account may frozen. Also, the account will be no more useful for further transaction.

For Investors who do invest in Mutual Funds and National Pension Scheme, the investment account blocked if FATCA not certified. The account holder not able to do further transaction and their pension account will may blocked.

For Factca related forms for USA netizens, you may visit the source

  1. Can Physical Self Certification submitted for FATCA?

    In case your citizenship, birthplace or residence proof used for the tax purposes are outside the boundaries of India. The physical FATCA self-certification form may taken and submit to regional nodal officer or the central recording keeping agency.