India and United States (US) on 9 July 2015 signed Inter Governmental Agreement (IGA) to implement the Foreign Account Tax Compliance Act (FATCA). The agreement will promote transparency on tax matters between the two countries.
The agreement inked by Revenue Secretary Shaktikanta Das and US Ambassador to India Richard Verma in New Delhi underscores growing international co-operation to end tax evasion everywhere.
As per the IGA, FFIs in India will be required to report tax information about US account holders directly to the Indian Government which will, in turn, relay that information to the IRS. The IRS will provide similar information about Indian account holders in the United States. This automatic exchange of information is scheduled to begin on 30 September 2015.
Foreign Account Tax Compliance Act (FATCA)
Foreign Account Tax Compliance Act is a United States federal law that was enacted in 2010 to obtain information on accounts held by US taxpayers in other countries. The law was enacted It requires U.S. financial institutions to withhold a portion of payments made to foreign financial institutions (FFIs) who do not agree to identify and report information on US account holders.
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