In a strict move by the Income Tax department, all the bank account opened between July 1, 2014 and August 31, 2015 will be blocked, if they are not self-certified by April 30 to meet with FATCA (Foreign Account Tax Compliance Act) provisions.
Account holders will have to submit Know Your Customer (KYC) details and their Aadhaar number to banks and financial institutions by April 30 and self-certify them to comply with FATCA regulations.
The Central Board of Direct Taxes or CBDT said in a statement,”the account holders may be informed that, in case self-certifications are not provided till April 30, 2017, the accounts would be blocked, which would mean that the financial institution would prohibit the account holder from effecting any transaction with respect to such accounts.”
What is FATCA?
FATCA allows an automatic exchange of financial information between India and the US. India had entered into an agreement with the United States for implementation of FATCA with effect from August 31, 2015.
Under the FATCA provision, investors are required to provide details such as country of tax residence, tax identification number from such country, country of birth, country of citizenship etc.
FATCA is aimed at ensuring that individuals pay tax on income generated from their wealth parked overseas. It also obliges such banks and financial institutions to report such information about citizens having accounts with them.
Account holders are informed that, in case self-certifications are not provided till 30.4.2017,A/Cs would be blocked : pic.twitter.com/YICvRHqfPm
— Income Tax India (@IncomeTaxIndia) April 11, 2017
Here’s all you need to know:
- If the accounts are blocked due to lack of self-certification, then transactions by the account holder in such blocked accounts will be permitted once the self-certification is obtained and due diligence is completed, the tax department said.
- Earlier, the financial institutions had to obtain self-certification from account holders by August 31, 2016, in respect of all individual and entity accounts opened from July 1, 2014-August 31, 2015.
- Mutual funds and other financial institutions had also asked customers to follow the new norms.
- In view of the difficulties faced by stakeholders, the tax department had on August 31, 2016, extended the deadline for complying with self-certification norms.
- The financial institutions were advised to continue to work on completing the required due diligence, including obtaining self-certifications.
