RBI has said India and the US have agreed to implement a foreign tax compliance law and asked banks and financial institutions to register by this year-end to report accounts and assets held by US citizens. India and the US have agreed to implement Foreign Accounts Tax Compliance Act (FATCA), a US law that targets tax non-compliance by US taxpayers with foreign accounts. The Inter-Governmental Agreement (IGA) on FATCA, which came into effect on 11 April, will be signed only after Cabinet approval. ‘Indian Financial Institutions would have time up to 31 December, 2014, to register with US authorities and obtain a Global Intermediary Identification Number (GIIN),’ the RBI said in a notification. FATCA mandates reporting by US taxpayers about certain financial accounts and offshore assets and reporting by foreign financial institutions about accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest.
Indian financial institutions with overseas branches have time until 31 December to register. However, they should register for GIIN only when the formal IGA is signed after cabinet approval, the RBI added, saying this would be communicated to them.