New Delhi: India and the U.S. last week signed an agreement to facilitate exchange of tax information between the two countries.

The Foreign Account Tax Compliance Act was signed by Revenue Secretary Shaktikanta Das and U.S. Ambassador Richard Verma in New Delhi, and becomes effective.

“FATCA is a mutual effort to combat tax evasion and it would be mutually beneficial. FATCA would detect, discourage offshore tax evasion. This kind of exchange of information is top priority for governments,” Verma said.

Under the inter-governmental agreement, Indian financial institutions would share information about U.S. taxpayers with U.S. tax authorities, and the U.S. would share similar details about Indian nationals.

The current reporting period beginning Oct. 1 would be for July-December 2014.

“I am confident working together we can detect, deter and discourage offshore tax evasion, increase transparency and create stronger global financial system,” Verma said.

The U.S. has signed similar agreements with more than 110 jurisdictions and is engaged in related discussions with many more. It enacted FATCA in 2010 to obtain information on accounts held by U.S. taxpayers in other countries.

Under India’s new Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, persons with unaccounted overseas assets have been given an opportunity to declare their assets before Sept. 30, and pay tax and penalties of up to 60 percent.

Those who fail to declare their unaccounted overseas wealth during the voluntary compliance period will have to pay tax and penalty of 120 percent, besides possible jail of up to 10 years.

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