Mumbai: The Income Tax Department on Tuesday made it mandatory for bank account holders to self-certify their accounts by April 30. The new ruling applies to accounts that were opened between July 2014 to August 2015.
Previous deadline for fulfilling self-certification guidelines was August 2016 which the tax authorities had extended at that time. They have now released a new last date of April 30 that has landed taxpayers in a situation.
Under Foreign Accounts Tax Compliance Act or FATCA, an information sharing agreement between the US and India, both the governments agreed upon sharing information on investors, country of tax residence, identification number, country of birth, country of citizenship, according to NDTV.
Besides, all holders of accounts at financial institutions, banks and insurance have also been mandated to submit RBI-backed Know Your Customer (KYC) details before the specified time.
The account holders will be barred from using their account if they fail to comply with the latest directive of income tax department. So why I-T department has issued these guidelines? What do provisions of Foreign Account Tax Compliance Act or FACTA say about it. Read here;
1) Tax department says India entered into an Inter-Governmental Agreement with the government of United States for putting into effect FATCA that was implemented from August 2015.
2) All account holders covered by FATCA rules had to submit self-certification by August 31, 2016. These accounts were meant to be closed had they been were unable to fulfill the requirement.
3) However, the tax authorities at that time clarified that financial institutions were not required to close these accounts by August 31, 2016. Instead, they were advised to continue to work on obtaining self-certification.
4) The blockade, if imposed, on an account would be lifted if the account holder later fulfills the criteria under FATCA rules and they will also be allowed to operate it.
5) The FATCA agreement was reached with sole of purpose of pushing tax compliance among investors. It also aimed at ensuring individuals paid tax on income generated from their wealth parked overseas, an article in NDTV said.