India Concludes Pact With U.S. On Tax Evasion Under FATCA
Sebi was asked to examine the applicability of the FATCA provisions to all market intermediaries regulated by the capital markets regulator. This was examined by Sebi in coordination with the Finance Ministry.
According to sources, necessary comments and suggestions have been provided to the Ministry and pursuant to the government directions, Sebi would issue appropriate guidelines in 2014-15 to market intermediaries on due diligence and reporting requirements with respect to FATCA.
While FATCA became a law way back in 2010, the final regulations were issued for it in January 2013 and it is set to come into effect from July 1, 2014 after signing of IGAs with different countries.
The law aims to check and impose withholding tax on illicit activities of some wealthy individuals who use offshore accounts to evade millions of dollars in taxes.
A noncompliance with FATCA entails 30 percent withholding tax on certain U.S. source payments.
The U.S. Treasury had released two formats of the IGA - Model 1 and Model 2. In Model 2, financial institutions will report information directly to the U.S. IRS rather than their local jurisdictions.
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