RBI has asked all banks and financial institutions to be prepared for the implementation of Foreign Account Tax Compliance Act – FATCA. In a notification yesterday, RBI said that India has signed an agreement with US for improving international tax compliance apart from a multi-lateral agreement to automatically exchange information based on Convention on Mutual Administrative Assistance in Tax Matters. RBI has asked all regulated entities to take appropriate action for implementation of due diligence and reporting requirements as laid down in the rules and ensure compliance.
The RBI said all the concerned financial institutions should register on the related e-filing portal of Income Tax Department as Reporting Financial Institution by submitting the requisite details. RBI has said that reporting should be in a manner that lends itself to credible auditability including audit of the IT system which should be suitably upgraded to not only maintain the information required under the rules but also to record and store the due diligence procedures.
RBI has said that non-compliance of the rules can lead to huge penalties in addition to loss of reputation.
