One will now have to submit a self-certification of FATCA (Foreign Account Tax Compliance Act) for their National Pension System (NPS) accounts opened on or after July 1, 2014.
If any account holder, whose account is being maintained by National Securities Depository Limited (NSDL), fails to comply, chances are their accounts will be blocked.
Here is a look at the changes and regulations.
National Pension System: Updates for account holders
Procedure and deadline
The account holders need to download the self-certification, attach the documents needed for evidence, sign and submit it to Central Recordkeeping Agency (CRA) for NPS.
The address for the same is, NSDL e-Governance Infrastructure Limited, 1st Floor, Times Tower, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai - 400 013.
Currently account holders are being initiated to complete the procedure by 30th April,2017.
What is FATCA?
FATCA is a part of the HIRE Act under IRS, requiring foreign financial Institutions and other non-financial foreign entities to report on the foreign assets held by US account holders.
Therefore, Indian financial institutions are liable to inform the US government about every US citizen card holders doing business transactions in India, to stop them from using this as a loophole to avoid taxes.
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Mutual Funds need to be FATCA compliant
Mutual Funds also have to be FATCA compliant, according to the 11th April FinMin release, for all MF accounts that have been opened between 1st July, 2014 and 31st August, 2015.
This is obligatory for Individual and Non-Individual Investors, so even MFs made by firms fall under this Foreign Account Tax Compliance Act.
Surge in pension fund
NPS inflows witness a surge
According to Pension Fund Regulatory and Development Authority of India (PFRDA) there has been a surge in NPS inflows with over 37 lakh subscribers enlisting last year.
The chief reasons for rise in demand have been falling interest rates and Rs. 50,000 additional tax exemption one gets for NPS investments. According to PFRDA Chairman Hemant Contractor, total subscriber base now stands at 1.54 crore.
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SEBI is of the opinion that assured returns would put an added liability on AMCs, which promote these funds, while RBI is against this proposition as they consider it to be debt security in the garb of equity.
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