NEW DELHI – India has concluded an ‘in substance’ agreement with the U.S. to combat possible tax evasion by Americans through Indian financial entities.
The ‘in substance’ agreement with India under Foreign Account Tax Compliance Act (FATCA) was concluded on April 11, the U.S. Treasury said.
Market regulator Sebi plans to issue guidelines for market intermediaries in this regard this fiscal, sources said.
The U.S. said India has consented to Model 1 – Intergovernmental Agreement (IGA) under FATCA.
As per Model 1, financial entities will be required to report information on U.S. account holders to the US IRS (internal revenue service) through CBDT.
The FATCA requires the U.S. government to sign IGAs with various countries, including India, where American individuals and companies may hold accounts and other assets.
“Regulatory measures from SEBI and other regulators after the signing of this IGA would immensely help Indian financial institutions to cope up with this complex regulation,” said Amit Maheshwari, Partner Ashok Maheshwary & Associates.
He said other regulators like RBI are also expected to issue guidelines to ensure compliance of FATCA.
Signing of IGA coupled with regulatory measures from SEBI would be helpful for Indian financial institutions and corporates to better comply with this significant legislation, experts said.
