Why FATCA / CRS Declaration Form is Important ?

Learn Easy way to submit FATCA Form to Banks/Financial Institution – Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standards (CRS) guidelines and detailed analysis.  Basically , This is an agreement between India and USA to compile with any unreported foreign transaction. The details of FATCA will be shared with US tax authority and IRS. This law was first introduced by US authority in year 2009. Government of India has made an agreement between USA and Multilateral Competent Authority Agreement (MCAA) developed by the Organization for Economic Co-operation and Development (OECD) and G20 countries. 

This is also a part of recently implemented law by Indian government i.e. Black Money Act (BMA). This newly introduced law states the definition of BMA where any unreported asset or income of an Indian resident irrespective of their place of residence would be considered as Black Money and will be subjected to penalties and prosecution.

CRS (Common Reporting Standards) is globally accepted reporting format for exchange of account information. This is automatic exchange of accounts information between bilateral treaty partner countries.

Read : Aadhaar is Now Must for Opening Bank Accounts

In India , a FATCA i.e. Foreign Account Tax Compliance Act and CRS (Common Reporting Standard) declaration was prepared by Banks, financial institutions , intermediaries to comply with the Income Tax /Central Board of Direct Taxes (CBDT) rules.

As per the Income Tax and CBDT  notification all the existing and new customer of any of the financial institution like Banks, Mutual Funds, Share & DEMAT et. to provide certain financial information of accounts owned by NRIs. 

As per the FATCA rules, Individual needs to follow the guidelines as like :

1. FATCA/CRS declaration form is entirely different than normal KYC or eKYC documents.
2. FATCA declaration form is nor uniform among all financial institutions
3. Customer of Banks and  investors are required to make the declaration separately for respective institution.  For example if someone is having account with three diferent banks, they must fill the Fatca declaration with all three, similarly, if you have invested in mutual funds but in different funds (e.g. DSP, SBI, Reliance, HDFC, IDFC etc ), you will need to complete different FATCA/CRS declarations with all the intermediaries (registrars) for all these mutual funds like Karvy, CAMS and reliance etc.
4. Similarly in case of DMAT account with brokerage firm like Sharekhan, Karvy etc.

Read : Can non-resident Indians (NRIs) invest in mutual funds ?

FATCA Declaration Form

There is no specific declaration form being defined. This may vary as per the requirement of various financial institutions/intermediaries, but the FATCA declaration form must be having the following common required information :

1. Name and Permanent Account Number (PAN)
2. Type of address in KYC
3. Place (city/state) of birth, Country of birth and Nationality
4. Gross Annual Income or Net worth
5. Occupation
6. Whether Politically Exposed Person (PEP) or related to PEP
7. Whether resident of another country
8. Country of Residence, Tax ID number and type.

The declaration form must have information related to country of residence. Financial institute needs to comply with the CBDT notified rules 114F-114H and report will be submitted to tax authorities after deducting TDS on income or sale amount. Each time customer need to provide information if there is any change to the bank/financial institution within 30 days. 

What is Residential Status ?

The term residential status is very important as the essence of FATCA success is entirely depends on it. Financial institution must verify and determine the correct residential status.One must remember that the residential status under Foreign Exchange Management Act (FEMA) and Income Tax Act (ITA) are different. Any individual may be a non-resident under FEMA and a resident under ITA. There must be clear understanding in differentiating the residential status especially for the purpose of income tax.

Submission of FATCA Form to Financial Institution/Banks

Check out the below mentioned link to submit FATCA form to various financial intermediaries online :

CAMS : FATCA Declaration on CAMS

KARVY : FATCA Declaration on KARVY 

FRANKLIN : FATCA Form

Similarly, FATCA can be submitted to many of the Indian banks under Online mode i.e. SBI, HDFC, Axis Bank, IDBI Bank, CITI Bank etc.