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Markets regulator Sebi today asked depositories to make necessary arrangement for reporting of dividend and interest payments in customer accounts for the implementation of the Foreign Account Tax Compliance Act (FATCA). They have to comply with the direction by July 15, the Securities and Exchange Board of India (Sebi) said in a circular. The decision has been taken in consultation with the Ministry of Finance. "Depositories shall provide additional field in the depository system to the RTAs (registrar and share transfer agents) by July 15, 2017 whereby the RTAs can incorporate the details of corporate action viz dividend/interest in rupee terms per unit of the security at the time of setting up of corporate action," Sebi said. Depositories -- National Securities Depository Limited (NSDL) and Central Depository Services India Limited (CDSL) -- would have to avail such information to depository participants (DP) to enable them to do necessary reporting. The reporting with respect to dividend/interest should be done on 'entitlement' basis and not on the basis of actual payment received by the demat account holder. "If a demat account is identified as a 'reportable account' during a calendar year by the DP, the reporting under ... Is to be done for the dividend/interest entitlements during the entire calendar year i.
E. Including the period of the calendar year before identification of such account as a 'reportable account' by the DP," Sebi said. Depositories, which are like banks in the securities market, hold securities such as shares, debentures, bonds, government securities and mutual fund units, of investors in electronic form at the request of the investors through a registered Depository Participant. Just like banks hold the funds for their depositors, the depositories hold the securities of investors in an account. FATCA has enabled automatic exchange of financial information between India and the US. It enhances tax transparency and accountability in matters of financial reporting and payment of taxes which are legitimately due to various governments.
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