India considering signing Inter-Governmental Agreement with US

NEW DELHI: India is considering signing an agreement with the US to make Indian financial institutions complaint with Foreign Account Tax Compliance Act ( FATCA), Minister of State for Finance Jayant Sinha informed Parliament today.

"A proposal for signing an Inter-Governmental Agreement (IGA) with United States of America which will result in Indian financial institutions being complaint with the provisions of FATCA is under consideration," Sinha said in a written reply to a question in the Rajya Sabha.

Under the pact, financial entities will be required to report information on US account holders to the US IRS (internal revenue service) through the Central Board of Direct Taxes.

The FATCA requires the US government to sign IGAs with various countries, including India, where American individuals and companies may hold accounts and other assets.

The non-compliance with FATCA would entail 30 per cent withholding tax on US source payments.

Under the pact, the exchange of information between the countries will be subject to a confidentiality clause.