FATCA confusion remains as India delays signing IGA

Time is ticking for India to sign its inter-governmental agreement (IGA) with the US under the Foreign Account Tax Compliance Act (FATCA) after it received a one month extension on the original December 31 deadline.

President Obama’s visit to India last week fuelled speculation that the IGA could be signed without the need for another one month extension. However, as the president left, the agreement between the two countries was further delayed. Tax professionals speculate that the agreement it close to completion, though are unsure when it will be signed.

India agreed to a Model 1 IGA in substance on April 11 2014, requiring that Indian foreign financial institutions (FFIs) report information on their account holders with American tax liabilities.

Rajashekara Maiya, associate vice president and head of product strategy at Infosys Finacle, a banking solutions firm, reports that many financial institutions were compliant and registered by the December deadline, without the formal agreement.

“We [India] were not able to sign this IGA but at the same time, on December 30 of last year, there was a government note that was…