Sebi has asked market intermediaries to register with US authorities by December-end, as part of implementing the Indo-US agreement that aims to combat possible tax evasion by Americans.
India and the US have agreed to implement Foreign Accounts Tax Compliance Act (FATCA), a US law that targets tax non-compliance by US taxpayers with foreign accounts.
The Inter-Governmental Agreement (IGA) on FATCA, which came into effect on April 11, will be signed only after Cabinet approval.
"Indian financial institutions would have time upto December 31, 2014 to register with US authorities and obtain a Global Intermediary Identification Number (GIIN)," the Securities and Exchange Board of India (Sebi) said in a circular issued today.
However, it said registration should be done only after the formal IGA is signed.
Also, RBI has asked banks and financial institutions to register by this year-end to report accounts and assets held by US citizens.
FATCA mandates reporting by US taxpayers about certain financial accounts and offshore assets and reporting by foreign financial institutions about accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest.
Indian financial institutions with overseas branches have time until December 31 to register.
Overseas branches of Indian financial institutions that "do not have an IGA but permit financial institutions to register and agree to a Foreign Financial Institution (FFI) agreement, may register with US authorities within the stipulated time period and obtain a GIIN in accordance with the requirements to avoid potential withholding under FATCA," Sebi said.
Overseas branches in a jurisdiction that does not have IGA and does not allow an FFI agreement may not register and they would eventually be subject to withholding under FATCA, it added.
The government has advised that if registration of the parent bank or head office is a pre-requisite for a branch to register, such banks should do so as per the given time frame, as per Sebi.
