Sebi's Norms for Indo-US tax Compliance Pact by Next Fiscal
With talks underway for an Indo-US agreement to combat possible tax evasion by Americans through Indian entities,Sebi plans to issue new guidelines for market intermediaries in this regard next fiscal.
The negotiations and discussions between India and the US have commenced for an inter-government agreement (IGA) to be signed between the two countries under the Foreign Account Tax Compliance Act (FATCA),a senior official said.The new Act requires the US government to sign IGAs with various countries,including India.
While FATCA became a law way back in 2010,the final regulations were issued for it in January 2013 and it is set to come into effect from July 1,2014,after signing of IGAs with differentcountries.FATCA aims to check and impose withholding tax on illicit activities of some wealthy individuals who use offshore accounts to evade millions of dollars in taxes.
Once this new Act and the Indo-US IGA come into effect,all financial institutions in India would need to carry out a detailed due diligence on all their clients and report details of their US clients to the US tax department (Internal Revenue Service).
Any non-compliance of the FATCA provisions would result in penal withholding of 30% of the total US-source income of such financial institutions.AGENCIES
Times of India, New Delhi, 24-03-2014