US investors in India must self-certify bank accounts by April 30 to prevent them from being blocked

US investors in India must self-certify bank accounts by April 30 to prevent them from being blocked

The CBDT directive is to ensure adherence(पालन) to the US’ Foreign Account Tax Compliance Act, which applies in India under a deal with the country. US investors in India must self-certify bank accounts by April 30 to prevent them from being blocked.  

The Income Tax Department on Tuesday directed financial institutions to block accounts opened by US taxpayers in India between July 2014 and August 2015 unless they are self-certified by April 30. In a notification, the Central Board of Direct Taxes said this was to ensure compliance (अनुपालन) with the United States’ Foreign Account Tax Compliance Act, which makes certain that investors from the US pay tax on their income from assets(संपत्ति) abroad.

Self-certification includes providing details such as country of tax residence, tax identification number from the country, country of birth, country of citizenship, etc. 

India had signed a deal with the US to bring FATCA into effect from August 31, 2015. As per this law, financial institutions in India – mutual funds, insurance companies, brokerages, banks and hedge funds – need to submit details of the accounts of US taxpayers’ with investments/assets in the country to the CBDT, which in turn passes the information on to the Internal Revenue Service of the US.