Indian in US? Your account is now under Delhi surveillance

Thousands of Indian citizens in the US – from IT workers, health professionals, students and everyone else under the sun – will soon be innocent victims to snooping by the Indian government. If an Indian citizen holds a bank account in the US, minute details about his/her bank account will be shared with New Delhi by Washington.

The Modi government will be getting personal details, including the amount of interest credited in the account, dividend payments and other income paid or credited in these accounts. This would also mean access to identity, address, bank account number and Tax Identification Number (TIN) of thousands of Indians living, working and studying in the US.

The decision to sign the Inter-Governmental Agreement (IGA) with the US, that would allow it access to personal bank information of Indians in the US, was taken by the union cabinet on March 17. According to Finance Ministry, the agreement is likely to be signed in the coming weeks.

The first tranche of deeply personal bank information of Indians in the US pertaining to 2014 will be received by the Indian government before September 30 this year.

Bizarrely enough, the Americans will be getting more than their pound of flesh from India for revealing personal bank information about Indians in the US. Although India gets access only to bank account information of Indian citizens, the US can get access to even information of ‘non-US entities’ operating in India if it has even one American working for them. That means information about any Indian corporation or organisation would be provided to Washington on request, if it has an American on rolls.

These revelations have come to light in the Manual on Exchange of Information conceptualised in May by the Central Board of Direct Taxes (CBDT) under Ministry of Finance.

The document reveals centre was left with little option in the face of a domestic American tax law that made close to 112 nations across the world agreeing to sign IGAs with Washington. But the prospect of lucrative access to sensitive banking information about its own citizens in the US seems to have been too hard for the Modi government to resist.

The trigger for this unprecedented snooping on Indians in America seems to have been the enactment of the Foreign Accounts Tax Compliance Act (FATCA) by the Obama administration in 2010. This tax law, dubbed pernicious in sections of the American press, sought to gather minute banking information about American professionals and non-US firms that employed them across the globe through imposition of punitive measures on banks of other countries functioning on American soil.

For Indian banks, that would have meant the imposition of a 30 percent ‘withholding tax’ on all payments routed through them. The document notes that Indian banks in the US would have been unable to transact in American dollars if India had not decided to sign the IGA with the US government.

The Finance Ministry’s manual says the snooping on Indians in the US is ‘not on a reciprocal basis’. The manual notes that the Americans were getting far more than what they were giving in exchange. It says, “No information about controlling persons or beneficial owners of entities would be available to FATCA partner (India). Further, while US will be receiving information including account balance or value, the FATCA partner (India) would get information only about the existence of the account and the interest and other income paid or credited to the account, but not the account balance or value.”

However, financial experts believe such snooping by the Modi government on deeply personal banking information of ordinary Indian citizens in the US is unprecedented in the country’s history.