Live
- Protest rallies in Manipur against 'mass killing of 10 village volunteers'
- Open Network for Digital Commerce: Tirupati corporation to promote SHG groups products online marketing
- 4th T20I: India elect to bat first in series decider vs South Africa
- The Telangana Woman Sushma Thodety Shines in the UMB Pageant's ‘Mrs. India’ Competition
- Suspect arrested after firing shots near Israeli consulate in Istanbul
- IPL 2025: Pant, Iyer, Rahul, Buttler, Shami among most-priced as 571 players set for mega auction
- Delhi Mayor poll: Cross-voting shows AAP councillors’ frustration, says Congress leader Jitender Kochar
- NIA files fresh charges against Mizoram-based arms trafficker
- From appeasement to 'New India' pitch: Nadda credits PM Modi for changing style of politics
- Bihar liquor ban gave rise to unauthorised trade, means ‘big money’ for officials: Patna HC
What is FACTA compliance?
US citizenship, Greencard, can no longer be a way of saving tax for some, as India has agreed to provide information for compliance with the Foreign Account Tax Compliance Act (FATCA), which became law in March 2010. Either US citizens or institutions cannot refrain from paying tax on their investments or assets in India.
.jpg)
US citizenship, Greencard, can no longer be a way of saving tax for some, as India has agreed to provide information for compliance with the Foreign Account Tax Compliance Act (FATCA), which became law in March 2010. Either US citizens or institutions cannot refrain from paying tax on their investments or assets in India.
On July 9 this year, in order to evade tax evasion by US individuals and entities, US Ambassador to India Richard Verma and Indian Revenue Secretary Shaktikanta Das signed an agreement to implement the Foreign Account Tax Compliance Act (FATCA). The agreement is designed to increase transparency between the two nations on tax matters. The agreement came into effect on September 30.
FATCA targets tax non-compliance by US taxpayers with foreign accounts. It focuses on reporting: By U.S. taxpayers about certain foreign financial accounts and offshore assets; and by foreign financial institutions about financial accounts held by U.S. taxpayers or foreign entities in which U.S. taxpayers hold a substantial ownership interest. The objective of FATCA is the reporting of foreign financial assets; withholding is the cost of not reporting.
U.S. individual taxpayers must report information about certain foreign financial accounts and offshore assets on Form 8938 and attach it to their income tax return, if the total asset value exceeds the appropriate reporting threshold. To avoid being withheld upon, a foreign financial institution may register with the IRS, obtain a Global Intermediary Identification Number (GIIN) and report certain information on U.S. accounts to the IRS.
US financial institutions and other US withholding agents must both withhold 30% on certain payments to foreign entities that do not document their FATCA status and report information about certain non-financial foreign entities. As US stringent punishment for those evading taxes – 100% in some cases – an option for the Indians who got Greencards to hide their investments is to become Indian citizens again. Else, they have to declare their assets, abide by the US law and pay penalties.
The US will also share financial information on Indian residents who have investments in the US with the Indian Ministry of Finance (MoF). FATCA requires foreign financial institutions (FFIs) to register with the IRS and report information about financial accounts held by US taxpayers. However, once a country enters into an agreement with the US, individual FFIs no longer have to register with the US IRS, reducing their compliance burden.
