66 Responses to USA-India FATCA Agreement update: Is India Preparing for FATCA compliance? The Budget 2014 proposes so.

  1. Subit Das says:

    Very informative article. Can you pls help let me know:

    What about accounts active before June 30 2014?
    I have had an NRE account active till 2013 with balance
    more than 50,000$s. Will these accounts be covered under FATCA
    reporting?

    Thanks

  2. K.R Rao says:

    Dear Sir ,
    Kindly let me know whether I can seek help from you with the following query.

    1. Can you please tell me whether this PUBLIC PROVIDENT FUND is reportable under FATCA and also CRS? ie Standard for Automatic Exchange of Financial Account Information,?

    2.Whether the PPF account in the post office is as it is an EXCLUDED account from reporting under FATCA by virtue of a tax free saving,limited contributions @ year?

    3.Whether the new KYC new rules of additional,supplementary information/Fatca CRS declaration/ viz tax residency details of U.S will be required for PPF accounts also (like mutual funds)?The address in PPF records is local.

    Thank you ,I appreciate your kind answer ,
    best regards
    KR RAO

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. There is no specific exclusion given to PPF account (e.g. accounts under Senior Citizen Savings Scheme are specifically excluded). The excluded account includes certain accounts that comply with conditions. PPF may be interpreted as complying with those conditions. However, they are not specifically excluded. I think as NRIs are not allowed to open or renew PPF account, PPF accounts are assumed to be held by residents. Also, I think PPF account satisfies the conditions to be an excluded account and as NRIs are not allowed to open or renew PPF accounts, they may not be reported.

      2. I think PPF account will have stringent KYC requirements. If not now, very soon. They may require KYC on maturity or renewal. If it is found that you renew or open the PPF account in violation of law (as NRI), NO INTEREST will be paid and only principal will be returned to you.

      It would be very easy now to find out people who are NRI but are maintaining accounts as residents because of unique ID in banks, requirement of PAN for all investments, requirement of Passport number while filing tax returns, separate reporting of payment of interest, salary, rent to NRIs by organizations and stringent KYC requirements. So I would recommend complying with all rules and requirements. Thanks.

  3. krishnan says:

    Hi,
    Myself and my wife left US 11 years before and we are in India now. My wife had only TIN number in US. My wife never transferred any money from abroad in her Indian bank accounts. She has few banks a/cs. mostly joint a/cs. Now she got a letter from from SBI “sub: FATCA indicia – request for self certification and doc evidence”
    I am wondering how she got this letter and why she got it. We are yet to submit the docs.
    Please suggest.

    Thanks,
    Krishnan

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      EVERY account holder and investor will get such letter asking them to make a declaration. If your wife is not a US resident – No Greencard or No US citizenship, she can not be claimed as a US resident and it would be okay to declare only as an Indian resident. Thanks.

  4. Ashok says:

    I have interest in some mutual funds as well bought ULIP policies. Both are tax free in India. Can you advise as to what would be tax liabilities for this in USA through FBAR reporting. I have not cashed in any since investing. Will I need to declare appreciation year over year . Please advise how to handle this prudently.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Your mutual fund and ULIP would be considered as PFIC and taxed as such in USA. I would suggest you contact your CPA for the reporting of income and asset to IRS or Dept. of Treasury (FBAR). Thanks.

  5. VG says:

    Mr Patel
    Thanks for such valuable information. I need help with the following questions.
    1)I understand that as a person filing income tax return in US I am required to disclose all the accounts with total of $10,000 in my return. Does this amount indicate aggregate of all my accounts in India or each account separately?
    2) $10,000 implies balance on the 31 December or the maximum balance anytime during the year?
    3) Does this amount include only bank savings accounts or does it also include FDs and shares etc?
    4) once the treaty is signed, Indian banks will be reporting the accounts over $50,000 starting June 2014. If I have not disclosed the account in my returns to IRS for year 2010 to 2014, and if my balance is between $10,000 and $50,000 can I avoid disclosing it now for the past years.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. Aggregate. Total of all accounts
      2. Anytime during the year
      3. Everything – saving, checking, FD, shares, mutual funds, life insurance, etc.
      4. Two requirements are different. FBAR is Dept of Treasury requirement of $10000+ to be filed by June 30; FATCA is IRS requirement to file form Form 8938 while filing tax return. Thanks.

  6. Rekha says:

    Hi Jigesh, Nice Blog!!!

    Are the banks going to identify reportable US person first based on A/c value greater than 50K and then forward the information to CBDT or Banks are going to forward any and every US person regardless of the amount? Even if India has not signed the treaty, how this will work in general in nature and not country specific so can you comment on this based on your understanding.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Your guess would be as good as mine as only after FATCA is signed, the Income Tax department/RBI will give instructions for compliance. I would think it would be only US residents having account balance of over $50,000. However, an NRI may have more than 1 account so it may also be possible for banks to report all accounts and then RBI/income tax department aggregate the balance and then report to IRS accounts of only those NRIs whose aggregate balance is over $50,000. Again, I am not sure. Thanks.

  7. Mark says:

    As of now, without FATCA agreement in place between India and the US, is there any banking information sharing for normal regular working professionals who may have less than $50K in bank deposites ? unless of course there is huge misconduct.

  8. Mark says:

    Hi Jigesh,

    On some website I have read as of 23 May 2015, the FATCA agreement between US and India not signed. They have reached an agreement but not implementing the agreement. Is this correct? If yes, do you know when they are going to start actually implementing the agreement?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      FATCA has not be signed yet as it is not available on the IRS/ Dept. of Treasury’s website. When an agreement is signed, it is made available within few days. You might have read that the Union Cabinet has approved signing of FATCA agreement. However, it has not been signed yet. Thanks.

      • Manoj says:

        Foreign Account that has been closed prior to signing the agreement with a partner country will be outside the purview of this agreement, is this correct?

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Only if it was close before the applicable date i.e. June 30, 2014 (as per current provision). Thanks.

          • Manoj says:

            This would be true for high value accounts such as accounts exceeding 50K, correct? Don’t they have 1 year completion for high value over 100K, 2 year for accounts between 50K and 100K ? I think less than 50K not reportable even otherwise. Can you comment on this?

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

            1 year for $1 million+ and 2 years for $50K+. Less than $50k, it is not mandatory but the bank or country may report voluntarily. Thanks.

  9. PK says:

    I started working in the US from April 2010. that year i was in the US for more than 6 months so i acquired the NRI status. i started remitting my US savings to Indian bank account from Jun 2011 and then regularly thereafter. in 2011 my max balance in my indian account ( as per US treasury dept year end currency exchange rate for that year) crossed the fbar limit of $75K. this happened for 2012, and 2013 calendar years as well. i was transferring funds offshore to buy property. in 2013 i converted the indian bank account to NRO and created a new NRE account , BEFORE i did my property transaction.

    i had some MF/IPOs purchased in India in year 2008,09 when i was in Resident status in India, and i purchased some MFs in India when i was in NRI status in Jan 2012. i also booked some FDs in India when i was in NRI status. i redeemed all of these investments to NRO in 2013 to make property payments. My NRO account shows interest, dividend, pf, gratuity incomes.

    I haven’t filled my Income Tax returns in india for FY 2010-11 and onwards. and when i filled my US ITRs for 2011,12,13 i did not show any indian accounts or the above income in the year.

    Q1) if an indian NRI transfers post tax US $ to India, and received some income in indian accounts. should he file indian income tax returns , US income tax returns, both or file indian itr and claim foreign tax credit in US.

    Q2)Do i need to amend US ITRs for 2011,12,13 to reflect the income in india ? and file FBAR/f 8398 for these 3 past years.

    Q3) Do i also need to prepare Indian Income tax returns for FY 2010-11 and onwards. Am i subject to FBAR penalty as i missed declaring my offshore accounts and income from indian accounts in US ITR. until 2013

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. File tax return in India only if income above basic exemption limit for the respective year (e.g. FY 2014-15, basic exemption limit is Rs. 250,000). You need to include all you income to your US tax return.
      2. You may decide whether you want to go for the Overseas Voluntary Disclosure Program or Streamlined Filing Compliance Procedures. Please consult your CPA.
      3. You have only 2 years to file Indian income tax return, i.e. now you can only file return for FY 2013-14 and 2014-15. The last day for filing tax return for FY 2012-13 was March 31, 2015. Please consult you Indian CA. For FBAR, please see #2. Thanks.

  10. Vinay says:

    Hi,
    When reporting interest earned on NRE FD in our US tax returns, which one should be used:
    1) Convert interest earned in Rs to $ using prevailing exchange rate
    2) Convert principal to $ using exchange rate on start of FD. Convert matured amount to $ using current exchange rate. Subtract the two to get interest in $.

    Method (2) accomodates for Rs->$ depreciation.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As income (interest) amount is fixed, I would recommend #1. When you invest in mutual funds and file 8621, #2 is used. However, please check with your CPA. Thanks.

  11. Priya says:

    Hi Jigar,

    I am a Usa resident since April 2014.
    1) In March 2014 I transferred $7000 from my indian resident account to my husbands USA bank account. Do we need to report this to the IRS? Now the USA bank account is jointly held by us with me as the first holder.
    2) Also in 2015 am planning to transfer $50000 to $55000 from our nre account to our USA bank account. Major money was originally inherited/saved/put in my name before 2012 by dad. Do we still have to report this to IRS? If yes, which forms do I have to report in?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Hi Priya,

      This is your 15th comment/question. I suggest you contact your CPA in USA and clarify all the issues. The information I share is for general information purpose but your questions are getting too personal including for future planning. You are requested to contact/consult your CPA or CA or professional advisor before you take any action.

      Please be absolutely clear that:

      You would need to report ANY and ALL transactions/accounts/assets if it is over the threshold specified by IRS or Department of Treasury or any other any agency or department. The limit applies even if they are held as single holder, joint holder (with your parents), jointly with your spouse or as POA (signature authority).
      Thanks.

  12. Prity Shah says:

    Hi,
    First off let me Thank you for your to the point and quick responses.
    My Query is as my cousin sister who was gainfully employed India and receiving consultancy/ Brokerage Income from family company involved in the Business of Logistics, got married and would shift her base to USA. Some of the points i would like to clarify are as under:
    1. Can she continue to get her commission Income from India as the project which she has brought in may continue for another two years, as her commission is linked to the business generated and payable at year ending i.e March. what will be the Tax effect and how will the credit for tax paid in India can be given.
    2.Should the whole commission be paid and transferred to her before she leaves for US or can it be paid as and when the project develops and deposited in her India Bank account. What about taxablity in US in that case .
    3. Can her father send her gift from India on regular basis. As gift Tax is not applicable in India, if yes than upto what amount and what about the taxablity in US.

    Thanking you in anticipation.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. and 2. The taxation is for the year. The USA follows calender year and Indian April-March. If she is a US resident for 2015, all her global income during 2015 will be subject to tax. Also, she would need to report her foreign financial accounts (FBAR) and assets (8938) if they are above the threshold.
      3. In India, Gift is on receiver and in USA, gift is on giver. Any foreign gift received is taxfree in USA but needs to be reported to IRS. The limit upto which your father can gift is fixed by RBI under LRS (Liberalized Remittance Scheme) and keep on changing. Currently, it is $250,000 per year. Thanks.

      • Prity Shah says:

        THANKS :)

        • Prity Shah says:

          PLEASE CLARIFY WITH REGARDS TO THE TAX CREDIT AVAILABLE IN US FOR THE TAX DEDUCTED AND PAID IN INDIA AGAINST THE SAID INCOME

          • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

            You would need to file foreign tax credit form providing the information of foreign income and tax deducted/paid and then calculate the allowable foreign tax credit you can claim against your global income. Thanks.

  13. Peeyush says:

    Hi Jigar,

    I am a NRI residing in UAE which has DTA with India but has has no income tax on Expats. While trying to invest in Indian Mutual funds I was trying to fill up the form and came across a declaration

    Are you a tax resident in any country other than India?*
    Yes No
    what do I say here in my case as I am in UAE with no income tax?

    then they ask to fill the tax id number as per above status?
    what does one do here?

    will appreciate you to throw some light on the same for all the countries who do not have a income tax?

    Thanks and Regards,

    Peeyush

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      You would say Yes and give the name of the country (UAE). If there is no tax id number, you keep it blank. Thanks. Let me know if you need help with MF investments in India. Thanks.

      • Peeyush Aras says:

        Hi Jigar,

        Thanks for your earlier answer above.

        recently I have been contacted by a MF scheme I have invested in India for filling a self declaration form.

        the email has following subject
        Subject: Important information required under new IT Rules (FATCA / CRS Obligations) and KYC

        The form that needs to be filled has

        1. FACTA & CRS details to disclose place and country of birth which is fine with me.

        under the same head they are asking disclosure for

        “Please indicate all countries other than India, which you are a resident for tax purposes, associated tax identification Number and its type eg TIN etc.

        I am a bit confused You have said to say Yes but though I am a resident of UAE, but I am not a resident for tax purpose as UAE has no income tax

        Then below they have asked to fill 3 heads

        Country(which you are a resident for tax purposes)-
        tax identification number-
        identification type-

        Can you please clarify on same and what to be filled in here.

        Rest are additional KYC details about occupation/income etc that I can fill.

        Thanks and Best Regards,
        Peeyush

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          You would give the name of your residence country and any ID that you have in the country. If no ID, mention not applicable. FATCA is for US residents and CRS requirement is for other countries to enable sharing of data – financial accounts, assets and income so that there is no unreported or undeclared assets or income. Thanks.

  14. Maya says:

    If the amount is below $50K, then there will be no reporting; Can you confirm this?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The $50,000 limit is only for identifying pre-existing accounts. I think, once it is identified, it may be reported. However, as the agreement is not yet signed and guidelines not issued, I may not be able to confirm or deny anything. Thanks.

  15. Maya says:

    Hi, Is this 50,000 USD due diligence requirement per bank, branch or total aggregate amount across various banks/branches in India. For e.g SBI has several branches across India. If you had 25,000 in two SBI branches, will that fall under this requirement? how about if you had 25,000 USD in two banks?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As the guidelines are not out, unfortunately, I won’t be able to tell you for sure. However, I think it would be per person as PAN would be same in all banks. If not, I think it should be per bank as the due diligence would be done in the Head Office by IT and while you may have different bank accounts in different branches, your customer ID may be the same. Thanks.

      • Maya says:

        If the amount is below $50K, there will be no reporting; Can you confirm this?

        • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

          Unfortunately, as US-India agreement is not signed and guidelines not available, I may bot be able to confirm anything. Thanks.

  16. Priya says:

    Dear Jigar,

    I entered USA in April 2014 and got my green card in May 2014. I will be filing returns jointly with my husband or he will claim me as dependent. We have joint nro Fds of around 50000$ with me as first name. Will I have to file Form 8938 and FBAR? Which year end balances will I have to see? June 2014, Dec 2014 or June 2015?

    Also we are planning to purchase property in USA which will be more than rs. 30,00,000 in joint name? Will I have to report that under Air provisions and Fatca in Indian income tax return?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. FBAR / Form 8938 Reporting is as of the December 31 balance.
      2. AIR is not for you. It is for bank or property registrar of India. No need to report property purchase to Indian government. Thanks.

  17. Maya says:

    Hi,
    Another question – if the US based person is listed as a nominee on accounts, are those accounts reportable as well?

    Thank you.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Nominee does not have signature authority so okay to ignore. Thanks.

  18. Maya says:

    Hi,
    From your discussion above, I surmise that:
    1) FFIs will report any US indica account that has $50,000 or more to Indian CBT. Even if a/c holder is married, 50K accounts will be reported unless the account is joint ac with spouse?
    2) Will FFIs report accounts that had the threshold $$ as of June 30, 2014?
    3) Will FFIs report accounts with balances as of December 2013 or calendar year 2013?
    4) What happens if accounts are closed before June 30, 2014 ? Will they be reported?
    5) What happens if accounts are closed after June 30, 2014? Will they be reported?
    6) What if the account money belonged to aging parents, etc and name was added for safety purpose? Will those accounts be reported? Can we remove our names from those accounts?
    7) If there are changes made to account indica today, will the accounts still be identified during the 50K pre-existing search?

    Thank you.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The actual procedural guidelines are not out yet so cannot comment for sure. However, following may help:
      1. The FFI may not know whether you file MFJ so would report account more than $50,000.
      2. Yes. June 30, 2014 is the date for performing due diligence for pre-existing accounts.
      3. I do not think so.
      4. They may not be reported.
      5. Yes. see #2 above.
      6. Yes. If you are required to report an account to IRS, it will be reported. IRS does not differentiate whether you are a primary holder or a joint holder. As long as you have a signature control, it needs to be reported.
      7. Yes. While you may try, but changes made today should not affect June 30. But, you never know. It would depend on the search criteria set up by a bank/FFI. If bank is searching for accounts with US Indicia at the time of reporting (at a future date) and then another query for the balance as of June 30 of the searched accounts, you may be lucky and may not be reported. However, that is not the intent. Thanks.

  19. Nagendra says:

    Hi Jigar,

    Thanks for all the wonderful articles you have posted so far.

    I have not done anything so far related FATCA/FBIR etc…, so I need your clarification on my following questions though most of those are answered above, I just needed some specific answers.

    I came to US in 06/2012 filed as single in 2013 (though married) since my family was not here with me. I also don’t think summing the balances in all my accounts it would have reached $10K. But including my wife’s it would have. Do I need to do anything related to this now.

    For 2013 I filed as married and also claimed for my daughter as my dependent as they were here with me, now adding the balance of all my accounts and all my wife’s accounts the total amount will be $30K for sure. Do I need to do something related to this now and since I did not file/declare this in 2014 while filing with IRS or did not declare as part of FATCA what fines will be levied on me? BTW none of the accounts are NRI/NRO/FCNR all are savings and FD accounts or some other funds(investments). Also I have put most of the money in my mother’s account for which I am not joint holder neither I have signing authority as well.

    I appreciate and will be thankful to in advance for your valuable response.

    Thanks,
    Nags

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Funds in mother’s account are not yours if you have given gift and can be ignored. FBAR limit of $10,000 is per person. So if your and your wife’s account is not joint, you and your wife may have upto $20,000 and not have to file FBAR. Also, all accounts, whether as resident or not need to be included. Thanks.

  20. Ashok says:

    What is reporting threshold limit for married filing jointly as on June 30 2014
    For performing due-diligence requirement?
    Thanks
    Ashok

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      The due diligence limit is $50,000. I would think it is individual as banks may not know that whether you are married or whether you file your return married filing jointly. Thanks.

  21. Ajay says:

    Hi Jigar,
    I moved to US earlier this year. I have few general questions:-
    1)Is there any limit on remittance amount from USA to India(per year etc.).If there is a limit, is it different for remit to my account Vs remit as gift to my parents account?
    2)Do I need to pay tax to Indian government if I remit money from USA (which has already been taxed by US).I need to transfer my savings in USA to India for investment purpose.
    3)Is there any complication in remitting to my Indian savings account apart from filing FBAR/FATCA in USA?
    4)Is it better to send money to my parent’s account in India than sending to my account to avoid FATCA/FBAR hassle? My parents can invest money in India and transfer me ownership of investment later.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      1. There is no limit if you transfer funds in your name or as gift to your parents from US to India. However, you would also need to know the Gift Tax act of USA. As a US resident you may give about $14,000 per person. If more, you may have to pay gift tax or need to declare to IRS to adjust it against your lifetime gift limit.
      2. There is no tax on remittance of funds in USA or in India.
      3. There is no complication in remitting. Only if you remit over the threshold or invest that generate income, complication starts.
      4. That would depend on other factors as well. I would need more info to guide you which course would be better. Please call if you want to discuss. Thanks.

  22. Jay says:

    My understanding is that the Jun 30, 14 FATCA implementation deadline works as follow:
    1. FFIs are subject to withholding starting Jul 1, 14, if their jurisdiction (India) does not enter into a FATCA agreement by Jun 30, 14. So by entering into an Agreements in Substance and passing the new finance bill, India is treated as having an IGA in effect and therefore its FFIs are not subject to withholding starting Jul 1, 14.
    2. Now, the due sovereign process must be followed (cabinet approval of finance bill) and to implement the reporting requirements within the FFIs.

    So, I agree that FATCA deadline of Jun 30, 14 is not relaxed for India (or any other country) and to avoid withholding from Jul 1, 14, the country must agree in substance to IGA, but then it will have more time for the practical implementation of this policy.

    What do you think?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      As mentioned, the provision will be effective from financial year 2014-15 i.e. year starting April 1, 2014. And, they have 2 years to complete the due diligence requirements. It will get implemented as the US IRS wants it. Thanks.

      • Jay says:

        Thanks Mr. Patel, you are correct. I was able to find references that until the IGA is signed, the jurisdiction (India) will be treated as having in effect the relevant model provisions (see http://www.irs.gov/pub/irs-drop/a-14-17.pdf). Such jurisdictions will be treated as having an IGA in effect from the date that the jurisdiction provides its consent (April 11, 2014 in case of India), until December 31, 2014, the date by which the IGA must be signed in order for this status to continue without interruption.
        During this period, India FFIs will be exempted from withholding and must report accounts for AY 2014 as per model agreement provisions.

  23. Jay says:

    Thanks again. I get the point that RBI does not need to issue a directive as the new finance bill will require banks to report to the CBDT who will in turn report to IRS.

    I also understand that enabling this reporting to IRS is a key reason for this bill as is stated in the Explanatory Memorandum (With a view to facilitate effective exchange of information in respect of residents and non-residents, it is proposed to amend the said section so as to also provide for furnishing of statement by a prescribed reporting financial institution in respect of a specified financial transaction or reportable account to the prescribed income-tax authority. It is further proposed that the statement of information shall be furnished within such time, in the form and manner as may be prescribed.)

    But the new bill goes into effect Apr 1, 2015. Based on this don’t you feel that the sequence of events must be as follows:
    1. IGA is signed and new Finance bill goes into effect. After this banks are given some time to implement and be in compliance Only after this can banks report to CBDT and CBDT report to IRS?

    Or,
    2. do you think that CBDT will start reporting to IRS whatever information it has based on existing AIR? And in this case will the reporting start Jun 30, 14 or after the IGA is signed? It seems to me reporting cannot start before there is an agreement and an agreement cannot ask for retroactive reporting.

    Basically, I am trying to get clarity on exactly when this information will be reported to IRS

    Thanks again for your help on this.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      It goes into effect from the Assessment year starting from April 1, 2015 i.e. for Financial year starting April 1, 2014 i.e. current financial year. Thanks.

  24. Jay says:

    Thanks for your response Mr. Patel. I am still unclear on one point:
    My bank rep says that India has not yet signed the IGA and that the agreement is that reporting will start in Jun 2015 not Jun 2014. Are you aware of this? So does this mean that the US account holder indica will be applied to accounts that exist as of Jun 30, 15 or for accounts that exist Jun 20, 14?

    Also, the RBI up to now has issued only this circular http://www.rbi.org.in/scripts/NotificationUser.aspx?Id=8970&Mode=0. This seems to indicate that once the IGA is signed more instructions will follow and only after giving the banks some time to comply can reporting start. Is it possible for RBI to require reporting from banks and not put such instructions in the public domain?

    Your help is much appreciated.

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      Your bank rep is right but it is half truth. While India has not signed, India has agreed in substance that India will sign FATCA. Due to uniformity of application of FATCA throughout the world and as more than 90 countries already signed or agreed in substance, there is no chance of it being delayed for India. Also, while RBI has not issued the guidelines, the budget 2014 provisions proposes to change the income tax act to report financial transaction and reportable accounts to the income tax department. So now, I can pretty confident that the bank and other financial institution will report the required information to the Income Tax Department and then to IRS. Check my blog on the subject at USA-India FATCA update: Is India Preparing for FATCA compliance? The Budget 2014 proposes so. Thanks.

  25. Jay says:

    Hi,
    thanks for your very informative set of articles on this very confusing topic. I have a few clarifications:
    - Is the reporting threshold of $50k based on the account balance as of Dec 31, 2013 or Jun 30, 2014?
    - In case of resident bank account opened with PAN and not foreign passport copy, will such accounts be reported by the bank (since they do not meet the indica of a US holder)?
    - Will a Mutual fund (such as IDFC) report directly or will it be reported via the Investment advisory service that sold the product (eg HDFC Investments) an still provides portfolio reports?

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      We appreciate your kind words
      1. The reporting threshold is on the balance as of June 30, 2014.
      2. It is not just passport but there are 9 indicia for identifying US accounts. If your account has any one, it could be reported.
      3. The framework is not final yet. The term is “financial institution” and “reportable account”. Investment in mutual fund can be made directly or through investment account so it could be by mutual fund or by investment account or both. Thanks.

  26. PATEL KIRITKUMAR says:

    Please advise on:
    What could be Threshhold limits for FFI under FATCA.
    NRI who are US residents, having financial accounts with more than threshold amount ?-which shall be reported to Tax authourities.
    Would appreciate your guidance.
    Thanks
    Kiritkumar Patel

    • Jigar Patel, CFA (USA), MBA-Finance (USA), CPA (USA), CA (India) says:

      For performing due-diligence requirement to identify US resident account as of June 30, 2014, the threshold limit is $50,000. For balances over $1 million, additional procedures or due diligence would be required. First, only the balance, then income and then transfers, balance and income in a phased manner. Thanks.

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