By
TII News Service
NEW
DELHI, AUG 31, 2016: 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. 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.
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