New Rules in India for Overseas Account Disclosures


By Rajesh H. Dhruva

Now that Indian Central Govt. Cabinet has approved signing of the Inter-Governmental Agreement (IGA) with the US; almost 680 Indian financial institutions including all leading banks like SBI Bank, ICICI Bank, Bank of Baroda, Bank of India, HDFC Bank, HSBC Bank, Axis Bank etc., and mutual funds like ICICIPru, HDFCMF, Birla Sunlife, DSPBlackrock, L & T, UTI MF and others have applied for USA Global Intermediary Identification Number (GIIN) under the Foreign Account Tax Compliance Act (FATCA).

It is a matter of time that Indian banks, mutual fund houses, insurance companies and brokerage houses shall start to report accounts showing US citizenship, US address, US POA, or US phone numbers if the balance in such account exceeded US$ 50,000 on June 30, 2014 or all accounts including accounts closed in 2014 as unfortunately an option is given to report ALL accounts if the banks, MF houses etc. choose to do so.

Of course, appreciating the possibilities of ignorance and negligence of tax payers, US Tax Authorities offered Streamlined Filing Compliance Procedure (SFCP) -a very liberal scheme for declaration of Indian income and financial assets not shown earlier in Fed Tax Form 1040 or FBAR returns for a penalty of only 5% of highest value of overseas Indian financial assets over the previous 6 year ends and requires revision of last 3 years Fed Tax Returns & FBAR returns for last 6 years.

But for sure this should be the last opportunity, as a failure to opt for SFCP can result in penal action by the IRS and in quite some time the IRS will send the details of the USA NRI account holders accounts by all Indian banks, MFs, insurance companies and stock brokers.

Rajesh H. Dhruva is a well-known Chartered Accountant and Financial Adviser from Rajkot, Gujarat. He has visited the US four times between 2011 and 2014, addressing associations of physicians, dental surgeons, diamond merchants, Jain Centre members and other groups in New York, New Jersey, San Francisco, Los Angeles and at an NRI meeting organized by the State Bank of India in Chicago on the subject of ” IRS requirements for Indian income, assets, investment regulations and opportunities for NRIs in India”. He will be visiting again later this month, with a stop in Houston on July 8.