FATCA Deadline - August 31, 2016
FATCA (Foreign Account Tax Compliance Act)
According to industry estimates, around 54 lakh folios are non-FATCA compliant. "We have requested the Ministry of Finance to freeze accounts which are non-FATCA compliant instead of closing them. I think the Ministry will respond positively to our request," C.V.R. Rajendran, CEO, AMFI said. He said that around Rs. 1.08 lakh crore industry AUM could be at stake if the industry fails to meet the August 31, 2016 deadline.
A Ministry of Finance notification dated August 31, 2015 states that institutions have to close the accounts if they are not able to get self-declarations from investors by August 31, 2016. "As per the alternate procedure, the self-certification required for new accounts should be obtained within one year of entry into force of the Intergovernmental Agreements (IGA), i.e., by 31 August, 2016 and if it is not obtained, the accounts need to be closed," states a Ministry of Finance notification dated August 31, 2015. "The problem is with the accounts between July 1, 2014 and August 31, 2015. There are two set of rules – one which says that we have to close the accounts if we are not able to get self-certification from investors by August 31, 2016. The second rule says that we can't raise fresh money in such cases. Closing accounts in MF parlance means redeeming and giving back money to investors. We are awaiting clarity on what to do if we are not able to meet the deadline," says G Pradeepkumar, CEO, Union KBC Mutual Fund.
Fund officials say that while investments in MFs from US citizens is not significant the FATCA rule which requires them to take self-declaration from domestic investors which is posing a problem as they have substantial amount of money invested in MFs. "This (FATCA) rule is affecting local investors. Why should they suffer? We are waiting to hear from Finance Ministry for some remedial measures," says Jimmy Patel, CEO, Quantum MF. Investors who have invested in mutual funds after August 31, 2015 are FATCA complaint since fund houses insist investors to submit a self-declaration form before initiating any transaction. In fact, all registrar and transfer agents have introduced online facility for distributors and investors to update their FATCA information. "Indian investors who are getting this communication from AMCs are thinking that it is only for US citizens. So they are ignoring it. Thus it is very challenging to get their self-declaration from them. So all new forms have FATCA, Common Reporting Standard (CRS) & Ultimate Beneficial Ownership (UBO) Self Certification Form declaration which is now mandatory," says an operations head of a bank sponsored fund house.
Please find below direct link to FATCA online updation:
Sundaram BNP Paribas Fund Services Limited;https://www.sundarambnpparibasfs.in/web/service/fatca/