NEW DELHI, Mar 3: Terming the financial information exchange pact FATCA between India and USA as an ‘inequitable system’, the Finance Ministry today said it has received written commitment from the US that they will move towards full reciprocity.
“We should look at FATCA as very a special case. It’s a law which is made in USA, it’s law which is imposed by USA on the rest of the world. Its exchange of information which is not fully reciprocal, yet India and other countries around the world have had to sign those agreements,” Department of Revenue Joint Secretary Akhilesh Ranjan said at an event here.
“It is an inequitable system, I agree with you. We have already received some information from USA about Indian taxpayers. We have also received written commitment that they will move towards full reciprocity,” he added.
The Foreign Account Tax Compliance Act (FATCA) came into effect from September 30 which has enabled automatic exchange of financial information between India and the US.
The Inter-Governmental Agreement (IGA) between India and US, signed in July as part of FATCA implementation, requires the Indian Financial Institutions to provide necessary information to Indian tax authorities, which will then be transmitted to the US automatically.
The rules prescribe reporting requirements on a staggered basis starting from 2014, and reporting of all details prescribed from 2017 onwards.
They also specify due diligence procedure for identifying reportable account and various forms. Indian entities will do a reciprocal information sharing about Americans.
The FATCA agreement enhances tax transparency and accountability in matters of financial reporting and payment of taxes which are legitimately due to various governments.
Ranjan said India is convinced that source based taxation is better for India and also for developed countries. (PTI)
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