India’s tax department said on Friday financial institutions can now obtain self-certification from their account holders through internet banking to comply with the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standards (CRS).
The move came after representatives of financial institutions told the government that physical self-certification of the large number of accounts they hold was very difficult, the Central Board of Direct Taxes (CBDT) said in a statement.
FATCA is a US law that aims to ensure that tax is paid on income generated from wealth overseas. India had last year signed a pact with the US for FATCA’s implementation, which provides for automatic exchange of financial information between the two countries. The CRS is a global reporting standard for exchange of information and allows tax authorities to get a clearer understanding of financial assets held abroad by their residents.
The CBDT also clarified that the financial institutions do not need to collect the tax identification number (TIN) from a person who has not obtained it from the country where the person is a resident for tax purposes. Financial institutions should get the TIN when the person obtains it, the CBDT said.
Besides, the tax department clarified that valuation of securities should be done at the values regularly communicated by depositories such as Central Depository Services Ltd to the depository participants and brokers. This clarification came after the department received queries regarding the account balance of a custodial account and how to value various kinds of securities maintained in the account, the CBDT said.
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