PFRDA asks intermediaries to comply with FATCA rules
Statutes facilitates automatic exchange of financial account data
Pensions regulator PFRDA has asked all intermediaries registered with or appointed by the body to take necessary steps to ensure compliance with respect to the implementation of multilateral competent authority agreement (MCAA) and foreign account tax compliance act (FATCA).
Financial regulators in India have been asking entities to ensure compliance with changed income tax regulations, with India becoming a signatory to FATCA as well as a global pact to check tax evasion.
Under MCAA, all countries that are signatories are obliged to exchange a wide range of financial information after collecting them from financial institutions in their respective jurisdictions. FATCA will cover automatic sharing of information on bank accounts as well as financial products like equities, mutual funds and insurance and is aimed at fighting the menace of black money stashed abroad. India joined the MCAA on automatic exchange of financial account information on June 3. On July 9, the governments of India and the US signed an agreement to improve international tax compliance and implement the FATCA in India. The US has enacted FATCA in 2010 to obtain information on accounts held by US taxpayers in other countries. As per the agreement, foreign financial institutions (FFIs) in India will be required to report tax information about the US account holders/taxpayers directly to the Indian government, which will, in turn, relay that information to the US Internal Revenue Service (IRS). In case of non-compliance, the entities will face penalty.
For the implementation of the MCAA and the agreement with US, the government of India has made necessary legislative changes in the Income Tax Act, 1961. Further, the government has notified rules under the I-T rules, 1962, among others.
“All intermediaries registered/appointed by PFRDA are advised to take necessary steps to ensure compliance with the requirements specified in the aforesaid rules after carrying out necessary due diligence,” PFRDA said.
