Closure of financial accounts under alternative procedure of FATCA

[vc_row][vc_column][vc_column_text]The Inter-Governmental Agreement (IGA) with USA for implementation of FATCA entered into force on 31st August, 2015. Under the alternative procedure provided in Rule 114H(8) of the Income-tax Rules, 1962, the financial institutions need to obtain the self-certification and carry out due diligence procedure to determine the reasonableness of the self-certification in respect of all individual and entity accounts opened from 1st July, 2014 to 31st August, 2015.

  • Government of India
  • Ministry of Finance
  • Department of Revenue
  • Central Board of Direct Taxes

Such self-certification and documentation is required to be obtained by the financial institutions by 31st August, 2016, otherwise they are required to close the accounts and report the same if found to be a “reportable account” as per the prescribed due diligence procedure for pre-existing account Stakeholders have highlighted several difficulties in following the provision for “closure” of financial accounts.

In view of the same, India and the United States are discussing the alternative procedures under paragraph G of Section VI of Annex I with a view towards adjusting them to permit a few month extension of time for completing the due diligence and not requiring account closure within one year of entry into force of the agreement (i.e., August 31, 2016)

 

For providing immediate relief to the account holders and in wider public interest, it has been decided that, the financial institutions may not close the accounts by 31st August 2016 in respect of which self-certifications have not been obtained under the alternative procedure.

The revised timelines for completing due diligence in respect of such accounts shall be notified in due course. In the interim, the financial institutions should continue to work on completing the required due diligence, including obtaining self-certifications.[/vc_column_text][/vc_column][/vc_row]

CBDT enables PAN-Aadhaar Interchangeability

[vc_row][vc_column][vc_column_text]The Central Board of Direct Taxes (CBDT) has allowed interchangeability between permanent account number (PAN) and Aadhaar number for over 100 forms and returns. In the Union Budget in July, it was announced that Section139A of the Income-tax Act, 1961 has been amended to provide interchangeability of PAN and Aadhaar.But an amendment to implement the changes was pending.

CBDT has now amended the Income-tax Rules, 1962 (Rules), which means a person can use his or her Aadhaar number instead of PAN in various forms and documents.

The Finance Ministry also issued a notification G.S.R.825(E) dated November6 ,that on the basis of the power conferred by section 139A, read with section 295 of the Income-tax Act, 1961 (43of1961), the Central Board of Direct Taxes (CBDT) has made then rules to a mend the Income-tax Rules, 1962.

The government has   carried amendment in the various set of income tax forms and also certified that no person is being adversely affected by giving retrospective effect to these amendment rules.

The rules to amend the Income-taxRules,1962 will apply to various forms such as Form Nos. 3AC, 3AD, 8, 10CCB, 10CCBA, 10CCBB, 10CCBBA, 10CCBC etc and for the words and letters ‘Permanent Account No.’, wherever they occur, the words PAN or Aadhaar Number will be substituted.[/vc_column_text][/vc_column][/vc_row]