The Income Tax Department of India has said that all bank account holders who opened their accounts between July 1, 2014, and August 31, 2015, need to provide self-certification of compliance under Foreign Account Tax Compliance Act (FATCA) by April 30, 2017, or else their accounts will be blocked.
The announcement which came on Tuesday was a step taken to comply with FATCA – a pact signed between India and the US. It was signed in 2015 and allows both countries to share data on tax evaders.
Account owners will have to submit Know Your Customer (KYC) and Aadhaar details to the banks. It is a move which will enable Aadhaar links to all accounts (government’s aim for digital India) to honour the pact with the US as well.
The Tax department said in a statement, “The account holders may be informed that, in case self-certifications are not provided till April 30, 2017, the accounts would be blocked, which would mean that the financial institution would prohibit the account holder from effecting any transaction with respect to such accounts,”.
Here are a few more things about this recent development:
- India entered into an agreement with the US for the implementation of FATCA with effect from August 31, 2015.
- Earlier, financial institutions had to obtain self-certification from account holders by August 31, 2016, with regard to all accounts opened from July 1, 2014-August 31, 2015.
- Keeping in mind the difficulties faced by the stakeholders, the tax department had to extend the deadlines.
- It’s not just savings account and current accounts; mutual funds and other financial institutions have asked their customers to comply with the rule as well.
- If account holders fail to self-certify within the stipulated timeline, banks will block their accounts and no transaction can take place.
- However, once customers self-certify and verification is complete, account holders will get back access to the blocked account.
Tax evasion is a serious crime and should be nipped in the bud. The move is aimed to improve data sharing so that tax evasion becomes harder. Make sure you provide your Aadhaar and KYC details before April 30.