India gets a month more to sign FATCA with US: Revenue Secretary Shaktikanta Das

NEW DELHI: India and some other countries have got one more month from the US to sign the Foreign Account Tax Compliance Act (FATCA), an agreement which seeks to facilitate flow of financial information.

“US has given a month’s extension to India and some other counties to sign FATCA,” Revenue Secretary Shaktikanta Das said at an event here.

The initial deadline set by the US for signing FATCA was December 31.

“The finance ministry will seek the Cabinet nod before going ahead and signing the FATCA,” Das added.

Under FATCA, US government will sign Inter-governmental Agreement (IGA) for sharing of information with various countries, including India, where American individuals and companies have accounts and other assets.

The non-compliance with FATCA would entail 30 per cent withholding tax on US source payments.

Under the pact, the exchange of information between the countries will be subject to a confidentiality clause.

The US treasury had released two formats of IGA–Model 1 and Model 2. In Model 2, financial institutions will report information directly to the US IRS rather than their local jurisdictions.

Recently, referring to FATCA, Finance Minister Arun Jaitley had said the Reserve Bank has cautioned the government of serious consequences in case India fails to comply with the American legislation.

“The consequences of not signing the agreement with US under FATCA would be disastrous. It will negate the efforts being undertaken by our government to revive the Indian economy, he had said.

The Revenue Secretary also said that the government is making all efforts to achieve the current fiscal year’s revenue collection target.

“We are making all efforts to achieve FY 15 revenue tax collection target. We are holding regular review meetings with tax officers… Direct tax collections are looking up in December,” Das said.

The revenue collection target for direct taxes – levied on personal and corporate incomes — for the financial year 2014-15 was fixed at Rs 7,36,221 crore in the Budget.

The revenue target for indirect taxes for the current financial year is Rs 6.23 lakh crore, projecting a growth rate of about 25 per cent.