Bank Accounts For Overseas Transactions To Be Blocked Without Self Certification By April 30, 2017

The Logical Indian Crew

April 12th, 2017

Bank Accounts Transactions Block

Source: Hindustan Timesndtv | The Hindu Business LineIndian express | Credit: Hindustan Times | oneindia

Bank accounts used for international transactions including remittances and deposits from foreign countries, will be “blocked” after April 30, if the holder does not provide a self-certification of their identity and residential address. This applies to bank accounts opened between July 1, 2014 and August 31, 2015.

The self-certification must be submitted by April 30 to comply with FATCA (Foreign Account Tax Compliance Act). The CBDT (Central Board of Direct Taxes) issued a statement saying, “The account holders may be informed that, in case self-certifications are not provided till April 30, 2017, the accounts would be blocked, which would mean that the financial institution would prohibit the account holder from effecting any transaction with respect to such accounts”.



FATCA (Foreign Accounts Tax Compliance Act)

India had signed an IGA (Inter-Governmental Agreement) with the United States of America, for implementation of FATCA taking effect from August 31, 2015. FATCA enables automatic exchange of financial information between India and US. It generally requires foreign financial institutions and certain other non-financial foreign entities to report on foreign assets held by their US account holders or be subject to withholding on with-holdable payments.

For more information: Foreign Account Tax Compliance Act


Facts to Know

  • Earlier, the financial institutions were required to obtain self-certification from account holders by August 31, 2016, pertaining to all individual and entity accounts opened between July 1, 2014 and August 31, 2015. However, due to difficulties faced by stakeholders in obtaining submissions, the Tax department extended the deadline for submission and compliance with self-certification norms to April 30, 2017.
  • Customers of mutual funds and other financial institutions are also required to submit compliance documents. The primary purpose of FATCA is to ensure account holders do not evade tax on income generated from wealth lying abroad. FATCA requires such banks and financial institutions to report information about citizens holding accounts with them.
  • For self-certification, investors have to provide details such as country of tax residence, tax identification number from such country, country of birth, country of citizenship, etc. As per the RBI (Reserve Bank of India) norms, submission of permanent account number (PAN), Aadhaar Card, Driver’s license, Voter’s Identity Card or Passport will be accepted as proof of identity and address. However, quoting of Aadhaar card for self-certification is not mandatory, as stated by Central Board of Direct Taxes chairperson, Sushil Chandra, to Hindustan Times.
  • Under FATCA provisions, failure to provide self-certification by the said deadline will require financial institutions to close the accounts and report the same if found to be a “reportable account” as per the prescribed due diligence procedure for a pre-existing account.
  • In case if the accounts are blocked due to non-provision of self-certification by the said deadline, then, “The transactions by the account holder in such blocked accounts may, thereafter, be permitted once the self-certification is obtained and due diligence completed”, as per the statement issued by Tax department.

The Logical Indian urges all the relevant stakeholders of such bank accounts to comply with the required self-certification of their accounts by April 30, 2017, and show their patience and support with the initiative. This would help bring more transparency to the system, and improve tax reporting.

Share your thoughts..

Related Stories

RBI Clarifies It Is Mandatory For Bank Accounts To Be Linked With Aadhaar Under Money Laundering Act

Aadhaar

Never Passed Order To Link Bank Accounts With Aadhaar: RBI In RTI Reply

Aadhaar Made Compulsory For Opening Bank Accounts & Transactions Over Rs 50,000

SBI Cheque Charges

From This Month, SBI Card Users Need To Pay Rs 100 On Cheque Payments Less Than Rs 2000

SBI Charges

SBI Will Charge You For Low Balance In Account; Know About The Other Changes

Free Transactions

HDFC, ICICI, Axis Banks Are Charging Rs 150 After 4 Free Transactions From This Month

Latest on The Logical Indian

Fact Check

Fact Check: Did UPA Invite Taliban Leader To Speak At Think Fest In 2013?

Editor's Pick

A Common Man Turned Into A Brutal Murderer, Courtesy Social Media

My Social Responsibility

He Is Spending 40% Of His Salary To Run A School For The Children Who Cannot Afford Quality Education

News

Honor-Killing: Death Sentence To 6 Including Father-In-Law For Murdering A Dalit Engineering Graduate

My Social Responsibility

This Tribal Village Is On A Mission To Become The First English Literate Village Of India With The Help Of Their Local Language

News

Why Is The Transgender Community Upset About The Transgender Bill?