India has got one more month to sign the Foreign Account Tax Compliance Act (FATCA), a US law that mandates foreign financial institutions to exchange information about its taxpayers with its authorities.
“The US has given a month’s extension to India and some other counties to sign the FATCA. The finance ministry will seek the Cabinet nod before going ahead and signing the FATCA,” Shaktikanta Das, revenue secretary, said at an event here. The original deadline set by the US for signing it was December 31.
According to the Act, countries are required to sign agreement with the US for sharing of information related to American individuals and companies. The non-compliance with the FATCA would lead to a 30 per cent withholding tax on the US source payments. The law mandates that the exchange of information would be subject to a confidentiality clause.
This was a cause of concerns to the Indian authorities given the Supreme Court’s insistence on disclosing the names on the HSBC list which was received by India from France under a tax treaty that mandates confidentiality.
Following the instructions, the government had approached the court to get clarity on the confidentiality clause before signing the FATCA. The SC had then asked the special investigation team (SIT) on black money to take a call on the matter. The SIT has given a go-ahead to the government.