India-US Sign Pact On Tax Evasion
09 July, New Delhi
In a major step to put a brake on tax evasion, India and US Thursday signed an Inter Governmental Agreement (IGA) to implement the Foreign Account Tax Compliance Act (FATCA) to promote transparency between the two nations on tax matters.
The agreement underscored the growing international co-operation to end tax evasion everywhere.
FATCA is rapidly becoming the global standard in the effort to curtail offshore tax evasion. To date, the United States has IGAs with more than 110 jurisdictions and is engaged in related discussions with many other jurisdictions.
The signing of IGA is a re-affirmation of the shared commitment of India and USA towards tax transparency and the fight against offshore tax evasion and avoidance, Richard Verma, US Ambassador to India said after signing the agreement.
US enacted FATCA in 2010 to obtain information on accounts held by American taxpayers in other countries.
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.
It is hoped that the exchange of information on automatic basis, regarding offshore accounts under FATCA would deter tax offenders, would enhance tax transparency and eventually bring in higher equity in to the direct tax regime which necessary for a healthy economy. Revenue Secretary, Shaktikanta Das said. FATCA is rapidly becoming the global standard in the effort to curtail offshore tax evasion. To date, the United States has IGAs with more than 110 jurisdictions and is engaged in related discussions with many other jurisdictions.
The United States enacted FATCA in 2010 to obtain information on accounts held by US taxpayers in other countries. It requires US 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.
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.