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FOR CUSTOMERS

  • What is FATCA?
  • FATCA is an acronym for the Foreign Account Tax Compliance Act, a new set of US Tax Regulations brought in by the US govt. to prevent the tax evasion by US Nationals and the same enacted through the Internal Revenue Service (IRS), which is similar to Income Tax Department in India.

  • When was FATCA enacted?
  • IGA between India and US was signed on 9th July 2015.

  • What is the objective of FATCA?
  • The primary goal of FATCA is to obtain information from countries other than (reporting) USA about U.S. persons. FATCA would help USA to detect and prevent offshore tax evasion by U.S. persons by identifying them and collecting the appropriate tax on their holding financial assets outside the US.

  • What is CRS
  • CRS stands for Common Reporting Standard. To combat the problem of offshore tax evasion and avoidance and stashing of unaccounted money abroad requiring cooperation amongst tax authorities, the G20 and OECD countries working together developed a Common Reporting Standard (CRS) on Automatic Exchange of Information (AEOI). The CRS on AEOI was presented to G20 Leaders in Brisbane on 16th November, 2014.

  • When was CRS enacted?
  • India signed up for CRS on June 3, 2015

  • What is the objective of CRS?
  • The primary goal of CRS is to combat the problem of offshore tax evasion and avoidance and stashing of unaccounted money abroad through mutual exchange of information among countries. 98 Countries are the member of (CRS).

  • What information under CRS is required to submission?
  • Collect and report information about account holders held by residents in other countries to their tax authorities through Automatic Exchange of Information. Information relates to individuals, shell companies and trusts having beneficial ownership or interest in the “resident” countries.

  • Is there any legal binding to report under FATCA and CRS?
  • Necessary legislative changes have been made through Finance (No.2) Act, 2014, by amending section 285BA of the Income Tax Act, 1961. Income Tax Rules, 1962 were amended by inserting Rules 114F to 114H and Form 61B to provide a legal basis for the Reporting Financial Institutions for maintaining and reporting information.

  • What to Report?
  • In case of an individual, the name, address, Taxpayer identification number and date and place of     birth of each reportable person.

  • Whom to Report?
  • Information regarding Reportable persons is to be reported to CBDT every year.

  • Who is who?
    • FOR FATCA-
    • One or more specified U.S. persons

      (U.S. person means an individual, being a citizen or resident of the USA, OR a partnership or corporation organized in the USA, OR a trust OR an estate of a decedent who was a citizen or resident of the USA)

    • FOR CRS-
    • One or more persons that is a resident of any country or territory outside India (except USA) under the tax laws of such country 

  • I am not a US person, why should I give self certification?
  • If you are not a US person, you need not to give self certification. However, if any indicator that is set under Inter Governmental Agreement between USA and India, is found relevant to your account information, you need to provide us the self certification for our ascertaining your status under FATCA/CRS.

  • I have given self certification/undertaking at the time of opening of account. Do I need to give it again every year?
  • You need not to provide us the self certification again unless there are a change in circumstances which results in change in your Tax Residency Status. 

  • How the bank will find out that who is US person?
    • To identify US persons for US tax filing purpose, bank will run following checks in case of all accounts opened on or before 30 June 2014
    • Identification of the Account Holder as a U.S. citizen or resident;
    • Unambiguous indication of a U.S. place of birth
    • Current U.S. mailing or residence address (including a U.S. post office box);
    • Current U.S. telephone number
    • Standing instructions to transfer funds to an account maintained in the United States
    • Currently effective power of attorney or signatory authority granted to a person with a U.S. address; or
    • An "in-care-of" or "hold mail" address that is the sole address the Reporting [FATCA Partner] Financial Institution has on file for the Account Holder.
    • In accounts, opened on or after 1st July 2014, basis will be the self declaration by the account holder.
  • Who is Reportable under FATCA/CRS?
  • FATCA legislation will affect both individual and non-individual customers (entities) who are treated as ‘U.S. persons’ for U.S. tax purposes.
    With respect to CRS, the coverage would extend to account holders/ beneficial owners or controlling persons of entities, being tax residents of any of the signatory countries.

  • Definition of Reportable Assets as per Sec 295 of IT Act 1963, rules 114G and 114H.
  • Any of the following:

    • Financial account-any commercial, checking, savings, time or thrift account, CD, investment certification, certificate of indebtedness or other similar instruments held by a bank or insurance company.
    • Insurance contract.
    • Security viz. shares/ stock, bond, debenture or other evidence of indebtedness
  • Who is the resident of US (other than US Citizens) for the purpose of identification under FATCA?
  • You are a resident, for U.S. federal tax purposes, if you are a Lawful Permanent Resident of the United States at any time during the calendar year. This is known as the "green card" test.
    OR
    You will be considered a United States resident for tax purposes if you are physically present in the United States (U.S.) on at least:

    31 days during the current year, and
    183 days during the 3-year period that includes the current year and the 2 years immediately before that, counting:

    • All the days you were present in the current year, and
    • 1/3 of the days you were present in the first year before the current year, and
    • 1/6 of the days you were present in the second year before the current year.
  • If one or more of the -7- indicators for identifying US persons matches with my existing account details but I am not a US person, will the bank still give my information to US?
  •  

    No, before ascertaining your tax residency status, bank will not provide any information to US/any other country. This is why bank obtains Self Certification/Documents. If it is verified that that you are not tax resident of US or any other country, bank will not depart with any information to anyone.

  • No indicator matches with my existing account details but I am a US person. How the bank will cover me in FATCA?
  • If no indicator matches with your existing account (accounts opened up to 30 June 2014) details, bank will rely upon the details submitted by you. Further, if you have not offered/ submitted any updated information to bank about your tax residency/citizenship etc., onus of its implications will remain on you.

    In case of accounts opened on or after 01 July 2014, bank obtains the FATCA declaration (extended to CRS as well) on tax residency of account holders. This document is a legally valid declaration and bank will rely upon information disclosed in this form. 

  • At present, I am not a US person but in near future I am likely to get residency of US. What will be my position?
  • It will depend upon your residency status at the cutoff date for submission of information. However, you should update your account details as and when there is any change in circumstances which result in change in your tax residency.

  • Why the bank is concerned to know whether I am a US person or not?
  • The Inter Governmental Agreement signed on 9 July 2015 between USA and India made it mandatory for the banks to provide necessary information to the Indian Tax Authorities, which will then be transmitted to USA periodically. Banks are required to provide information about accounts held with them by USA persons or entities controlled by USA persons. 

  • I am a US person but joint account holder is not the US person? What is the position?
  • FATCA/CRS will be enforced on US person/tax resident of country outside India only and not on any other person who is tax resident of India.

  • I am a US person but the account balance is not from the US Income?
  • Under FATCA/CRS, banks to provide only information about accounts held with them by USA persons or entities controlled by USA persons. Banks are under no obligation to verify the source of funds in the account

  • I am a US person but can I be out of purview of FATCA.
  • Under extant Inter Governmental Agreement, certain categories of accounts are exempted from reporting. Accounts with balance below the threshold limit (US$50,000) are subject to non reporting.

  • Will the bank deduct tax and remit to US if I come under the purview of FATCA?
  • No, there is no such obligation has been imposed on banks in extant Inter Governmental Agreement.

  • If I do not provide you with any details to verify about my being US person, what the bank will do?
  • Under provisions of section 114H (8), bank will close down your account. However, the details of your account will be informed to the CBDT under category of “Recalcitrant Accounts”.
    But it has been decided that the financial institutions may not close the accounts by 31st august 2016 in respect of which self-certification have not been made under alternative process. The revised timelines for completing due diligence shall be notified in due course.

  • If I do not provide you with any details to verify about my being US person, and to the contrary close my account, what will be my position?
  • Under provisions of section 114H (8), bank will close down your account. However, the details of your account will be informed to the CBDT under category of “Recalcitrant Accounts”

  • Which Accounts are covered under FATCA & CRS?
  • All commercial, Current, Savings Bank and Term Deposits Accounts are covered under FATCA/CRS

  • Is Bank of Baroda the only bank to be affected by FATCA?
  • No. All Banks and other Financial Organizations will be affected by FATCA, however their approach to adopting FATCA may differ. Bank Of Baroda is committed to becoming fully FATCA-compliant in all countries where we operate.

  • Is FATCA applicable to personal or business customers?
  • FATCA legislation will impact both personal and business customers who hold an account, policy or agreement with Bank of Baroda.

  • Am I only affected if I am a US company?
  • No. The impacts of FATCA are wider than just US companies. Bank of Baroda is reaching out to many business customers to determine their status under FATCA. The aim of this exercise is to identify customers which are reportable under FATCA. We will be communicating with customers who need to take further action.

  • What do I need to do as a business customer?
  • In order to establish your tax status under FATCA, bank may need you to provide additional information/documentation. This documentation could be a declaration or a US tax form from the IRS. Bank will be communicating with affected customers that need to complete these forms, detailing when they will need to be completed by.

  • Does FATCA replace existing US tax rules that I already follow?
  • FATCA does not replace the existing US tax regimes, it may however add additional requirements and complexity to the existing tax rules you may already follow.

  • Why has my other bank asked for different documentation than Bank of Baroda?
  • The way in which Banks and Financial Organisations collect information from their customers in order to confirm their tax status under FATCA may vary. This may mean that in some instances you are asked for different documentation from Bank of Baroda than another Bank.

  • What information will Bank of Baroda report to the IRS or local tax authority?
  • The information reported the local tax authority will depend on the FATCA classification of the customer. This information will typically be of a personal nature in relation to the substantial US owners of a business (for example, Name, Address, US Taxpayer Identification Number), and of a financial nature (e.g. Account number, Account balance/Value). We will be communicating with the affected customers in detail on these requirements.

  • Will Bank of Baroda supply me with all the forms I need to complete?
  • Yes. If bank requires further information from you we will either send you the relevant forms or will contact you.

  • When do I have to provide the requested information and/or documentation for FATCA?
  • In general, customers should supply the requested documentation and information by the date contained within the communication.

 

FATCA link

https://rbidocs.rbi.org.in/rdocs/notification/PDFs/167FAD28BA94499CF412D9B58E4A5F1358DFE.PDF

CRS links

FOR Common Reporting Standard (CRS):-

http://www.oecd.org/tax/automatic-exchange/common-reporting-standard/CRS-related-FAQs.pdf

http://www.oecd.org/tax/automatic-exchange/crs-implementation-and-assistance/crs-by-jurisdiction/

http://www.oecd.org/tax/automatic-exchange/international-framework-for-the-crs/MCAA-Signatories.pdf

 

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