1. Information to be maintained and reported

After the RFI has identified the reportable accounts, RFI needs to report specific information in respect of each reportable account. As per Rule 114G(1), RFI needs to maintain and report the following information in case of each Reportable Account:-

(a) the name, address, taxpayer identification number (assigned to the account holder by the country or territory of his residence for tax purposes) and date and place of birth (in the case of an individual) of each reportable person, that is an account holder of the account;

(b) in the case of any entity which is an account holder and which, after application of due diligence procedures prescribed in rule 114H, is identified as having one or more controlling persons that is a reportable person,-

(i) the name and address of the entity, taxpayer identification number assigned to the entity by the country or territory of its residence; and

(ii) the name, address, date and place of birth of each such controlling person and taxpayer identification number assigned to such controlling person by the country or territory of his residence;

(c) the account number (or functional equivalent in the absence of an account number);

(d) the account balance or value (including, in the case of a cash value insurance contract or annuity contract, the cash value or surrender value) at the end of relevant calendar year or, if the account was closed during such year, immediately before closure;

(e) in the case of any custodial account,-

i. the total gross amount of interest, the total gross amount of dividends, and the total gross amount of other income generated with respect to the assets held in the account, in each case paid or credited to the account (or with respect to the account) during the calendar year; and

ii. the total gross proceeds from the sale or redemption of financial assets paid or credited to the account during the calendar year with respect to which the reporting financial institution acted as a custodian, broker, nominee, or otherwise as an agent for the account holder;

(f) in the case of any depository account, the total gross amount of interest paid or credited to the account during the relevant calendar year;

(g) in the case of any account other than custodial or depository accounts, including accounts held by investment entities and cash value insurance contract and annuity, the total gross amount paid or credited to the account holder with respect to the account during the relevant calendar year with respect to which the reporting financial institution is the obligor or debtor, including the aggregate amount of any redemption payments made to the account holder during the relevant calendar year; and

(h) in the case of any account held by a non-participating financial institution, for the calendar year 2015 and 2016, the name of each non­ participating financial institution to which payments have been made and the aggregate amount of payments.

(Ref: Page 29 of CRS and 94 of Commentary)

2. Account Holder

Account holder means the person listed or identified as the holder of a financial account by the financial institution that maintains the account. However, if a person, other than a financial institution, holds a financial account for the benefit or on account of some other person as agent, custodian, nominee, signatory, investment advisor, or intermediary, such other person will be treated as holding the account.

In the case of a cash value insurance contract or an annuity contract, the account holder is any person entitled to receive a payment upon the maturity of the contract or any person entitled to access the cash value or change the beneficiary of the contract and if no person can access the cash value or change the beneficiary, the account holder is any person named as the owner in the contract and any person with a vested entitlement to payment under the terms of the contract;

3. Tax Identification Number (TIN)

Definition

3.1. A Taxpayer Identification Number is a unique combination of letters or numbers, however described, assigned by a country to an individual or an Entity and used to identify the individual or Entity for purposes of administering the tax laws of such country.

Where the person is a resident of more than one country or territory outside India under the tax laws of such country or territory, the reporting financial institution shall maintain the TIN in respect of each such country or territory.

For example, if an individual X is tax resident of Belgium and account of such person is to be reported by an FI in India, the TIN of Belgium is required to be collected and reported by FI in respect of such person. TIN of Belgium is called Numéro National (NN).

In the above example, if X is tax resident of Belgium as well as France, TIN of both Belgium and France are required to be collected and reported by FI in respect of such person.

In the same example, it may be the case the X is having PAN. Then also, TIN for the purpose of reporting by FI will be Numéro National (NN).

Functional Equivalent of TIN

3.2. Many countries do not issue TIN to their taxpayers. However, such countries issue some other high integrity number with an equivalent level of identification (a functional equivalent). Examples of such numbers are-

  • Social Security Number
  • National Insurance Number
  • Citizen Or Personal Identification Code Or Number
  • Resident Registration Number

For Entities, a business! or company registration code!number may be used in case where no TIN has been issued to the entity. These numbers are functional equivalent of TIN.

TIN for Preexisting Accounts

3.3. TIN is very essential to correctly identify taxpayers. With respect to each reportable account which is a pre-existing account, TIN is not required to be reported if it is not in the records of the Reporting Financial Institution. However, the RFI shall obtain the TIN with respect to pre-existing accounts by the December 31, 2016 and shall report it with respect to calendar year 2017 and subsequent years.

“Reasonable efforts”means genuine attempts to acquire the TIN and date of birth of the Account Holder of a Reportable Account. Such efforts must be made, at least once a year. Examples of reasonable efforts include contacting the Account Holder (e.g. by mail, in-person or by phone), including a request made as part of other documentation or electronically (e.g. by facsimile or by email); and reviewing electronically searchable information maintained by a Related Entity of the Reporting Financial Institution, in accordance with the aggregation principles.

Exceptions

3.4. There are few exceptions to TIN reporting. For example, TIN is not required to be reported if,

  • TIN number (including its functional equivalent) is not issued by the relevant country or territory outside India in which the person is resident for tax purposes or;
  • The domestic law of the relevant country or territory outside India does not require the collection of the taxpayer identification number by any

There are some jurisdictions, such as Australia, which issue TINs, but their domestic law does not require the collection of the TIN for domestic reporting purpose. If a reportable account is maintained by a person resident in such jurisdictions, RFI is not required to collect the TIN for those jurisdictions.

It is also clarified that TIN is not required to be collected by the FIs even from a person (resident for tax purposes in a country or territory outside India ) who may be eligible to obtain a TIN (or the functional equivalent) in his country or territory of residence, but has not yet obtained a TIN. However, in this case, FIs may note down this fact and seek TIN from the person after he obtains the same.

AEOI Portal

3.6. To facilitate the implementation of AEOI, OECD has launched AEOI portal which contains useful information on AEOI. There is a section on TIN where information regarding issuance, collection and, to the extent possible and practical, the structure and other specifications of TIN of various countries have been complied. It also contains information on which documents, TIN of various countries can be found. RFI may go through this section to understand the TIN of various countries. The link is

http://www.oecd.org/tax/automatic-exchange/crs-implementation-and­assista nce/tax-identification-nu mbers/#d.en .347759

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4. Date of Birth

With respect to each reportable pre-existing account, date of birth is not required to be reported if the date of birth is not in the records of the RFI. However, the RFI shall obtain the date of birth with respect to pre-existing accounts by the December 31, 2016 and shall report it with respect to calendar year 2017 and subsequent years.

The date of birth is reportable for all new accounts.

5. Place of Birth

Place of birth is not required to be reported unless it is available in the electronically searchable data maintained by the RFI.

6. Address

In the case of an account held by an individual that is a reportable person, or controlling person, the address to be reported is the current residence address of the individual. If RFI does not have such address in its records, then RFI should report the mailing address available on file.

In general, an ‘in-care-of’ address or a post office box is not a residence address. A post office box that forms part of an address that also includes details such as a street, apartment or suite number or a rural route such that a place of residence can be clearly identified can be accepted as a residence address. In special circumstances such as that of military personnel an ‘in-care-of’

address may constitute a residence address.

In the case of an account held by an Entity that is identified as having one or more Controlling Persons that is a reportable person, the address to be reported is the address of the Entity and the address of each Controlling Person of such Entity that is the reportable person.

7. Jurisdiction of residence

After carrying out the due diligence, if an account is identified as reportable account, RFI must report the jurisdiction of residence of account holder or controlling person, as the case may be.

If there are more than one jurisdiction of residences, all such residences must be reported.

The jurisdiction of residence identified as a result of due diligence are without prejudice to any residence determination made by the RFI for any other tax purposes.

8. Account Number

The account number to be reported with respect to an account is the identifying number assigned by the Reporting Financial Institution to the account.

If no such number is assigned to the account, RFI must report a functional equivalent (i.e. a unique serial number or other number assigned to the Financial Account that distinguishes the account from other accounts maintained by such financial institution).

For example, it will be bank account number in case of bank accounts, contract or policy number for insurance contracts.

9. Account balance or value

The RFI must report the balance or value of the account as of the end of the calendar year.

An account with a balance or value that is negative must be reported as having zero account balance or value.

In the case of Cash Value Insurance or Annuity Contract, the RFI must report the Cash Value or surrender value of the account.

In the case of equity in a Financial Institution, the balance or value of an Equity Interest is the value calculated by the Financial Institution for the purpose that requires the most frequent determination of value.

In case of debt interest, the balance or value of a debt interest is its principal amount.

The balance or value of the account is not to be reduced by any liabilities or obligations incurred by an account holder with respect to the account or any of the assets held in the account.

The custodial account of a customer maintained with the Depository/ Depository Participant/broker contains various kinds of securities. For calculating account balance/value, valuation of securities may be done at the

values regularly communicated by Depository (CDSL/NSDL) to the depository participants/brokers.

Each holder of a jointly held account is attributed the entire balance or value of the joint account, as well as the entire amounts paid or credited to the joint account.

For example, there is a joint account held by two individuals (X & Y), having balance of USD 75,000. One of the Account Holders X is resident in France. The other person Y is resident in India. The amount reportable in respect of person X will be USD 75,000. Y is not reportable.

If both Account Holders in the above example are resident in France, then each would be attributed USD 75,000 in the report.

Closure of accounts

If the financial account was closed during the reporting period, then account balance or value immediately before closure shall be reported.

In determining when an account is “c osed”reference must be made to guidelines/procedures made by the sectoral regulator in this regard.

For example, an equity or debt interest in a Financial Institution would generally be considered to be closed upon termination, transfer, surrender, redemption, cancellation, or liquidation.

An account with a balance or value equal to zero or that is negative will not be a closed account solely by reason of such balance or value.

10. Reporting Period

The information to be reported must be that as of 31st December of every year.

11. Custodial Account

In case of custodial account, apart from general reporting requirements, the following information is to be reported for each reporting period is:

  • The total gross amount of interest paid or credited to the account
  • The total amount of dividends paid or credited to the account,
  • The total gross amount of other income generated with respect to the assets held in the account paid or credited to the account,
  • The total gross proceeds from the sale or redemption of Financial Assets paid or credited to the account.

The total gross proceeds from the sale or redemption of a Financial Asset is the total amount credited to the account of the person entitled to the payment without regard to any sums netted off against the payment to satisfy outstanding liabilities. For example, a loan used to fund acquisition of the asset may be repaid from the proceeds of sale. This must not be deducted from the amount reportable.

Commissions and fees paid with respect to the sale or redemption of the asset may be taken account of in arriving at the gross proceeds of sale.

Where the Financial Asset that is sold or redeemed is an interest bearing debt obligation the gross proceeds should include any interest that has accrued between interest payment dates.

12. Interest Paid or credited

For depository and custodial account, total gross amount of interest paid or credited to the account has to be reported. This interest is the actual interest paid or credited to the account and will not include accrued interest.

13. Currency

The value of the account should be reported in the currency in which account is denominated.

Any account maintained in rupees or in any permissible currency (other than the United States Dollar) as designated by the Reserve Bank of India shall be converted to United States Dollar at the end of the reporting period as per the reference rates of the Reserve Bank of India and such converted amount in the United States Dollar shall be used for determining the balance or value of a financial account.

In determining whether a preexisting account meets a threshold, the relevant date is the spot rate on June 30, 2014 (for US Reportable Account) and as on 31 December 2105 (for other reportable account). In the case of an insurance contract or an annuity contract, spot rate may be taken as on the most recent contract anniversary date.

In determining whether a preexisting account continues to meet a threshold in subsequent years or a new account meets or continues to meet a threshold, the relevant date is the spot rate on 31st December of relevant calendar year. In the case of a closed account, the relevant date is the spot rate on the date the account is closed.

For the reporting in May 2016, all reporting has to be done in INR. For the reporting in 2017 and onwards, Form 61B and Schema will be suitably modified to include a field for capturing type of currency in which account is denominated.

15. Due date for furnishing the Report

15.1. The information related to calendar year 2014 needs to be reported for only US reportable accounts and the statement should be furnished by 31st August, 2015, which has been extended to 10th September, 2015, by an order issued by CBDT on 25th August, 2015. In this statement, only the information referred to in clause (a) to (d) of Para 6.1 needs to be reported.

15.2. The information related to calendar year 2015 also needs to be reported for only US reportable accounts and the statement should be furnished by 31 st May, 2016. In this statement, only the information referred to in clause (a) to (d), e(i) and (f) to (h) of Para 6.1 needs to be reported.

15.3. For calendar years 2015 and 2016, in the case of any account held by a non-participating financial institution, the name of each non-participating financial institutions to whom payments have been made and the aggregate amount of such payments need to be reported.

15.4. For calendar years 2016 onwards, all the above information (a) to to (h) of Para 6.1 in case of both US and other reportable accounts need to be reported.

15.5. The statement of reportable accounts need to be furnished in respect of each account identified by carrying out due diligence procedure and in case when no account is identified as reportable account, a Nil statement needs to be furnished. A NIL statement can also be furnished if the RFI has not completed the due diligence procedures.

Source- Guidance Note on FATCA and CRS as updated on 30th November 2016

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