40 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
MINISTRY OF FINANCE
(Department of Revenue)
NOTIFICATION
New Delhi, the 30th September, 2015
(INCOME-TAX)
S.O.2676(E).--Whereas, an Inter-Governmental Agreement and Memorandum of Understanding (MoU)
between the Government of the Republic of India and the Government of the United States of America to improve
International Tax Compliance and to implement Foreign Account Tax Compliance Act of the United States of
America was signed at New Delhi on the 9th day of July, 2015 (hereinafter referred to as the said Agreement and
enclosed herewith as Annexure);
And whereas, the date of entry into force of the said Agreement is the 31st day of August, 2015, being the
date of notifications of completion of necessary internal procedures as required for entry into force of the said
Agreement in accordance with Paragraph 1 of Article 10 of the said Agreement;
Now, therefore, in exercise of the powers conferred by section 90 of the Income-tax Act, 1961 (43 of 1961),
the Central Government hereby notifies that all the provisions of the said Agreement between the Government of the
Republic of India and the Government of the United States of America for the exchange of information with respect to
taxes, as set out in the said Agreement, shall be given effect to in the Union of India with effect from the 31st August,
2015, that is, the date of entry into force of the said Agreement.
[Notification No. 77/2015 /F. No. 500/137/2011-FTD-I]
AKHILESH RANJAN, Jt. Secy.
Agreement between the Government of the Republic of India and the Government of the United States of
America to Improve International Tax Compliance and to Implement FATCA
Whereas, the Government of the Republic of India and the Government of the United States of America (each, a
"Party," and together, the "Parties") desire to conclude an agreement to improve international tax compliance through
mutual assistance in tax matters based on an effective infrastructure for the automatic exchange of information;
Whereas, Article 28 of the Convention between the Government of the Republic of India and the Government of the
United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to
Taxes on Income, together with a related protocol (the "Convention"), done at New Delhi on September 12, 1989
authorizes the exchange of information for tax purposes, including on an automatic basis;
Whereas, the United States of America enacted provisions commonly known as the Foreign Account Tax Compliance
Act ("FATCA"), which introduce a reporting regime for financial institutions with respect to certain accounts;
Whereas, the Government of India is supportive of the underlying policy goal of FATCA to improve tax compliance;
Whereas, FATCA has raised a number of issues, including that Indian financial institutions may not be able to comply
with certain aspects of FATCA due to domestic legal impediments;
Whereas, the Government of the United States of America collects information regarding certain accounts maintained
by U.S. financial institutions held by residents of India and is committed to exchanging such information with the
Government of India and pursuing equivalent levels of exchange;
Whereas, the Parties are committed to working together over the longer term towards achieving common reporting and
due diligence standards for financial institutions;
Whereas, the Government of the United States of America acknowledges the need to coordinate the reporting
obligations under FATCA with other U.S. tax reporting obligations of Indian financial institutions to avoid duplicative
reporting;
Whereas, an intergovernmental approach to FATCA implementation would address legal impediments and reduce
burdens for Indian financial institutions;
Whereas, the Parties desire to conclude an agreement to improve international tax compliance and provide for the
implementation of FATCA based on domestic reporting and reciprocal automatic exchange pursuant to the Convention,
and subject to the confidentiality and other protections provided for therein, including the provisions limiting the use of
the information exchanged under the Convention;
Now, therefore, the Parties have agreed as follows:
41
Article 1
Definitions
1. For purposes of this agreement and any annexes thereto ("Agreement"), the following terms shall have the
meanings set forth below:
a) The term "United States" means the United States of America, including the States thereof, and,
when used in a geographical sense, means the territory of the United States of America, including
inland waters, the air space, the territorial sea thereof and any maritime area beyond the territorial sea
within which the United States may exercise sovereign rights or jurisdiction in accordance with
international law; the term, however, does not include the U.S. Territories. Any reference to a "State"
of the United States includes the District of Columbia.
b) The term "U.S. Territory" means American Samoa, the Commonwealth of the Northern Mariana
Islands, Guam, the Commonwealth of Puerto Rico, or the U.S. Virgin Islands.
c) The term "IRS" means the U.S. Internal Revenue Service.
d) The term "India" means the Republic of India, and when used in a geographical sense, means the
territory of India and includes the territorial sea and airspace above it, as well as any other maritime
zone in which India has sovereign rights, other rights and jurisdiction, according to the Indian law
and in accordance with international law, including the U.N. Convention on the Law of the Sea.
e) The term "Partner Jurisdiction" means a jurisdiction that has in effect an agreement with the
United States to facilitate the implementation of FATCA. The IRS shall publish a list identifying all
Partner Jurisdictions.
f) The term "Competent Authority" means:
(1) in the case of the United States, the Secretary of the Treasury or his delegate; and
(2) in the case of India, the Central Government in the Ministry of Finance (Department of
Revenue) or their authorized representative.
g) The term "Financial Institution" means a Custodial Institution, a Depository Institution, an
Investment Entity, or a Specified Insurance Company.
h) The term "Custodial Institution" means any Entity that holds, as a substantial portion of its
business, financial assets for the account of others. An entity holds financial assets for the account of
others as a substantial portion of its business if the entity's gross income attributable to the holding of
financial assets and related financial services equals or exceeds 20 per cent of the entity's gross
income during the shorter of: (i) the three-year period that ends on December 31 (or the final day of
a non-calendar year accounting period) prior to the year in which the determination is being made; or
(ii) the period during which the entity has been in existence.
i) The term "Depository Institution" means any Entity that accepts deposits in the ordinary course of a
banking or similar business.
j) The term "Investment Entity" means any Entity that conducts as a business (or is managed by an
entity that conducts as a business) one or more of the following activities or operations for or on
behalf of a customer:
(1) trading in money market instruments (cheques, bills, certificates of deposit, derivatives,
etc.); foreign exchange; exchange, interest rate and index instruments; transferable
securities; or commodity futures trading;
(2) individual and collective portfolio management; or
(3) otherwise investing, administering, or managing funds or money on behalf of other persons.
This subparagraph 1(j) shall be interpreted in a manner consistent with similar language set forth in
the definition of "financial institution" in the Financial Action Task Force Recommendations.
k) The term "Specified Insurance Company" means any Entity that is an insurance company (or the
holding company of an insurance company) that issues, or is obligated to make payments with
respect to, a Cash Value Insurance Contract or an Annuity Contract.
l) The term "Indian Financial Institution" means (i) any Financial Institution resident in India, but
excluding any branch of such Financial Institution that is located outside India, and (ii) any branch of
a Financial Institution not resident in India, if such branch is located in India.
42 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
m) The term "Partner Jurisdiction Financial Institution" means (i) any Financial Institution
established in a Partner Jurisdiction, but excluding any branch of such Financial Institution that is
located outside the Partner Jurisdiction, and (ii) any branch of a Financial Institution not established
in the Partner Jurisdiction, if such branch is located in the Partner Jurisdiction.
n) The term "Reporting Financial Institution" means a Reporting Indian Financial Institution or a
Reporting U.S. Financial Institution, as the context requires.
o) The term "Reporting Indian Financial Institution" means any Indian Financial Institution that is
not a Non-Reporting Indian Financial Institution.
p) The term "Reporting U.S. Financial Institution" means (i) any Financial Institution that is resident
in the United States, but excluding any branch of such Financial Institution that is located outside the
United States, and (ii) any branch of a Financial Institution not resident in the United States, if such
branch is located in the United States, provided that the Financial Institution or branch has control,
receipt, or custody of income with respect to which information is required to be exchanged under
subparagraph (2)(b) of Article 2 of this Agreement.
q) The term "Non-Reporting Indian Financial Institution" means any Indian Financial Institution, or
other Entity resident in India, that is described in Annex II as a Non-Reporting Indian Financial
Institution or that otherwise qualifies as a deemed-compliant FFI or an exempt beneficial owner
under relevant U.S. Treasury Regulations in effect on the date of signature of this Agreement.
r) The term "Nonparticipating Financial Institution" means a nonparticipating FFI, as that term is
defined in relevant U.S. Treasury Regulations, but does not include an Indian Financial Institution or
other Partner Jurisdiction Financial Institution other than a Financial Institution treated as a
Nonparticipating Financial Institution pursuant to subparagraph 2(b) of Article 5 of this Agreement or
the corresponding provision in an agreement between the United States and a Partner Jurisdiction.
s) The term "Financial Account" means an account maintained by a Financial Institution, and includes:
(1) in the case of an Entity that is a Financial Institution solely because it is an Investment
Entity, any equity or debt interest (other than interests that are regularly traded on an
established securities market) in the Financial Institution;
(2) in the case of a Financial Institution not described in subparagraph 1(s)(1) of this Article,
any equity or debt interest in the Financial Institution (other than interests that are regularly
traded on an established securities market), if (i) the value of the debt or equity interest is
determined, directly or indirectly, primarily by reference to assets that give rise to U.S.
Source Withholdable Payments, and (ii) the class of interests was established with a purpose
of avoiding reporting in accordance with this Agreement; and
(3) any Cash Value Insurance Contract and any Annuity Contract issued or maintained by a
Financial Institution, other than a noninvestment-linked, nontransferable immediate life
annuity that is issued to an individual and monetizes a pension or disability benefit provided
under an account that is excluded from the definition of Financial Account in Annex II.
Notwithstanding the foregoing, the term "Financial Account" does not include any account that is
excluded from the definition of Financial Account in Annex II. For purposes of this Agreement,
interests are "regularly traded" if there is a meaningful volume of trading with respect to the interests
on an ongoing basis, and an "established securities market" means an exchange that is officially
recognized and supervised by a governmental authority in which the market is located and that has a
meaningful annual value of shares traded on the exchange. For purposes of this subparagraph 1(s),
an interest in a Financial Institution is not "regularly traded" and shall be treated as a Financial
Account if the holder of the interest (other than a Financial Institution acting as an intermediary) is
registered on the books of such Financial Institution. The preceding sentence will not apply to
interests first registered on the books of such Financial Institution prior to July 1, 2014, and with
respect to interests first registered on the books of such Financial Institution on or after July 1, 2014,
a Financial Institution is not required to apply the preceding sentence prior to January 1, 2016.
t) The term "Depository Account" includes any commercial, checking, savings, time, or thrift account,
or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate,
certificate of indebtedness, or other similar instrument maintained by a Financial Institution in the
ordinary course of a banking or similar business. A Depository Account also includes an amount held
by an insurance company pursuant to a guaranteed investment contract or similar agreement to pay or
credit interest thereon.
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 43
u) The term "Custodial Account" means an account (other than an Insurance Contract or Annuity
Contract) for the benefit of another person that holds any financial instrument or contract held for
investment (including, but not limited to, a share or stock in a corporation, a note, bond, debenture, or
other evidence of indebtedness, a currency or commodity transaction, a credit default swap, a swap
based upon a nonfinancial index, a notional principal contract, an Insurance Contract or Annuity
Contract, and any option or other derivative instrument).
v) The term "Equity Interest" means, in the case of a partnership that is a Financial Institution, either a
capital or profits interest in the partnership. In the case of a trust that is a Financial Institution, an
Equity Interest is considered to be held by any person treated as a settlor or beneficiary of all or a
portion of the trust, or any other natural person exercising ultimate effective control over the trust. A
Specified U.S. Person shall be treated as being a beneficiary of a foreign trust if such Specified U.S.
Person has the right to receive directly or indirectly (for example, through a nominee) a mandatory
distribution or may receive, directly or indirectly, a discretionary distribution from the trust.
w) The term "Insurance Contract" means a contract (other than an Annuity Contract) under which the
issuer agrees to pay an amount upon the occurrence of a specified contingency involving mortality,
morbidity, accident, liability, or property risk.
x) The term "Annuity Contract" means a contract under which the issuer agrees to make payments for
a period of time determined in whole or in part by reference to the life expectancy of one or more
individuals. The term also includes a contract that is considered to be an Annuity Contract in
accordance with the law, regulation, or practice of the jurisdiction in which the contract was issued,
and under which the issuer agrees to make payments for a term of years.
y) The term "Cash Value Insurance Contract" means an Insurance Contract (other than an indemnity
reinsurance contract between two insurance companies) that has a Cash Value greater than $50,000.
z) The term "Cash Value" means the greater of (i) the amount that the policyholder is entitled to
receive upon surrender or termination of the contract (determined without reduction for any surrender
charge or policy loan), and (ii) the amount the policyholder can borrow under or with regard to the
contract. Notwithstanding the foregoing, the term "Cash Value" does not include an amount payable
under an Insurance Contract as:
(1) a personal injury or sickness benefit or other benefit providing indemnification of an
economic loss incurred upon the occurrence of the event insured against;
(2) a refund to the policyholder of a previously paid premium under an Insurance Contract
(other than under a life insurance contract) due to policy cancellation or termination,
decrease in risk exposure during the effective period of the Insurance Contract, or arising
from a redetermination of the premium due to correction of posting or other similar error; or
(3) a policyholder dividend based upon the underwriting experience of the contract or group
involved.
aa) The term "Reportable Account" means a U.S. Reportable Account or an Indian Reportable Account,
as the context requires.
bb) The term "Indian Reportable Account" means a Financial Account maintained by a Reporting U.S.
Financial Institution if: (i) in the case of a Depository Account, the account is held by an individual
resident in India and more than $10 of interest is paid to such account in any given calendar year; or
(ii) in the case of a Financial Account other than a Depository Account, the Account Holder is a
resident of India, including an Entity that certifies that it is resident in India for tax purposes, with
respect to which U.S. source income that is subject to reporting under chapter 3 of subtitle A or
chapter 61 of subtitle F of the U.S. Internal Revenue Code is paid or credited.
cc) The term "U.S. Reportable Account" means a Financial Account maintained by a Reporting Indian
Financial Institution and held by one or more Specified U.S. Persons or by a Non-U.S. Entity with
one or more Controlling Persons that is a Specified U.S. Person. Notwithstanding the foregoing, an
account shall not be treated as a U.S. Reportable Account if such account is not identified as a U.S.
Reportable Account after application of the due diligence procedures in Annex I.
dd) The term "Account Holder" means the person listed or identified as the holder of a Financial
Account by the Financial Institution that maintains the account. A person, other than a Financial
Institution, holding a Financial Account for the benefit or account of another person as agent,
custodian, nominee, signatory, investment advisor, or intermediary, is not treated as holding the
account for purposes of this Agreement, and such other person is treated as holding the account. For
purposes of the immediately preceding sentence, the term "Financial Institution" does not include a
44 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
Financial Institution organized or incorporated in a U.S. Territory. In the case of a Cash Value
Insurance Contract or an Annuity Contract, the Account Holder is any person entitled to access the
Cash Value or change the beneficiary of the contract. If no person can access the Cash Value or
change the beneficiary, the Account Holder is any person named as the owner in the contract and any
person with a vested entitlement to payment under the terms of the contract. Upon the maturity of a
Cash Value Insurance Contract or an Annuity Contract, each person entitled to receive a payment
under the contract is treated as an Account Holder.
ee) The term "U.S. Person" means a U.S. citizen or resident individual, a partnership or corporation
organized in the United States or under the laws of the United States or any State thereof, a trust if (i)
a court within the United States would have authority under applicable law to render orders or
judgments concerning substantially all issues regarding administration of the trust, and (ii) one or
more U.S. persons have the authority to control all substantial decisions of the trust, or an estate of a
decedent that is a citizen or resident of the United States. This subparagraph 1(ee) shall be
interpreted in accordance with the U.S. Internal Revenue Code.
ff) The term "Specified U.S. Person" means a U.S. Person, other than: (i) a corporation the stock of
which is regularly traded on one or more established securities markets; (ii) any corporation that is a
member of the same expanded affiliated group, as defined in section 1471(e)(2) of the U.S. Internal
Revenue Code, as a corporation described in clause (i); (iii) the United States or any wholly owned
agency or instrumentality thereof; (iv) any State of the United States, any U.S. Territory, any political
subdivision of any of the foregoing, or any wholly owned agency or instrumentality of any one or
more of the foregoing; (v) any organization exempt from taxation under section 501(a) of the U.S.
Internal Revenue Code or an individual retirement plan as defined in section 7701(a)(37) of the U.S.
Internal Revenue Code; (vi) any bank as defined in section 581 of the U.S. Internal Revenue Code;
(vii) any real estate investment trust as defined in section 856 of the U.S. Internal Revenue Code;
(viii) any regulated investment company as defined in section 851 of the U.S. Internal Revenue Code
or any entity registered with the U.S. Securities and Exchange Commission under the Investment
Company Act of 1940 (15 U.S.C. 80a-64); (ix) any common trust fund as defined in section 584(a) of
the U.S. Internal Revenue Code; (x) any trust that is exempt from tax under section 664(c) of the U.S.
Internal Revenue Code or that is described in section 4947(a)(1) of the U.S. Internal Revenue Code;
(xi) a dealer in securities, commodities, or derivative financial instruments (including notional
principal contracts, futures, forwards, and options) that is registered as such under the laws of the
United States or any State; (xii) a broker as defined in section 6045(c) of the U.S. Internal Revenue
Code; or (xiii) any tax-exempt trust under a plan that is described in section 403(b) or section 457(g)
of the U.S. Internal Revenue Code.
gg) The term "Entity" means a legal person or a legal arrangement such as a trust.
hh) The term "Non-U.S. Entity" means an Entity that is not a U.S. Person.
ii) The term "U.S. Source Withholdable Payment" means any payment of interest (including any
original issue discount), dividends, rents, salaries, wages, premiums, annuities, compensations,
remunerations, emoluments, and other fixed or determinable annual or periodical gains, profits, and
income, if such payment is from sources within the United States. Notwithstanding the foregoing, a
U.S. Source Withholdable Payment does not include any payment that is not treated as a withholdable
payment in relevant U.S. Treasury Regulations.
jj) An Entity is a "Related Entity" of another Entity if either Entity controls the other Entity, or the two
Entities are under common control. For this purpose control includes direct or indirect ownership of
more than 50 percent of the vote or value in an Entity. Notwithstanding the foregoing, India may
treat an Entity as not a Related Entity of another Entity if the two Entities are not members of the
same expanded affiliated group as defined in section 1471(e)(2) of the U.S. Internal Revenue Code.
kk) The term "U.S. TIN" means a U.S. federal taxpayer identifying number.
ll) The term "Indian TIN" means an Indian taxpayer identifying number.
mm) The term "Controlling Persons" means the natural persons who exercise control over an Entity. In
the case of a trust, such term means the settlor, the trustees, the protector (if any), the beneficiaries or
class of beneficiaries, and any other natural person exercising ultimate effective control over the trust,
and in the case of a legal arrangement other than a trust, such term means persons in equivalent or
similar positions. The term "Controlling Persons" shall be interpreted in a manner consistent with the
Financial Action Task Force Recommendations.
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 45
2. Any term not otherwise defined in this Agreement shall, unless the context otherwise requires or the
Competent Authorities agree to a common meaning (as permitted by domestic law), have the meaning that it has at that
time under the law of the Party applying this Agreement, any meaning under the applicable tax laws of that Party
prevailing over a meaning given to the term under other laws of that Party.
Article 2
Obligations to Obtain and Exchange Information with Respect to Reportable Accounts
1. Subject to the provisions of Article 3 of this Agreement, each Party shall obtain the information specified in
paragraph 2 of this Article with respect to all Reportable Accounts and shall annually exchange this information with
the other Party on an automatic basis pursuant to the provisions of Article 28 of the Convention.
2. The information to be obtained and exchanged is:
a) In the case of India with respect to each U.S. Reportable Account of each Reporting Indian Financial
Institution:
(1) the name, address, and U.S. TIN of each Specified U.S. Person that is an Account Holder of
such account and, in the case of a Non-U.S. Entity that, after application of the due diligence
procedures set forth in Annex I, is identified as having one or more Controlling Persons that
is a Specified U.S. Person, the name, address, and U.S. TIN (if any) of such entity and each
such Specified U.S. Person;
(2) the account number (or functional equivalent in the absence of an account number);
(3) the name and identifying number of the Reporting Indian Financial Institution;
(4) the account balance or value (including, in the case of a Cash Value Insurance Contract or
Annuity Contract, the Cash Value or surrender value) as of the end of the relevant calendar
year or other appropriate reporting period or, if the account was closed during such year,
immediately before closure;
(5) in the case of any Custodial Account:
(A) the total gross amount of interest, the total gross amount of dividends, and the total
gross amount of other income generated with respect to the assets held in the
account, in each case paid or credited to the account (or with respect to the account)
during the calendar year or other appropriate reporting period; and
(B) the total gross proceeds from the sale or redemption of property paid or credited to
the account during the calendar year or other appropriate reporting period with
respect to which the Reporting Indian Financial Institution acted as a custodian,
broker, nominee, or otherwise as an agent for the Account Holder;
(6) in the case of any Depository Account, the total gross amount of interest paid or credited to
the account during the calendar year or other appropriate reporting period; and
(7) in the case of any account not described in subparagraph 2(a)(5) or 2(a)(6) of this Article,
the total gross amount paid or credited to the Account Holder with respect to the account
during the calendar year or other appropriate reporting period with respect to which the
Reporting Indian Financial Institution is the obligor or debtor, including the aggregate
amount of any redemption payments made to the Account Holder during the calendar year or
other appropriate reporting period.
b) In the case of the United States, with respect to each Indian Reportable Account of each Reporting
U.S. Financial Institution:
(1) the name, address, and Indian TIN of any person that is a resident of India and is an Account
Holder of the account;
(2) the account number (or the functional equivalent in the absence of an account number);
(3) the name and identifying number of the Reporting U.S. Financial Institution;
(4) the gross amount of interest paid on a Depository Account;
(5) the gross amount of U.S. source dividends paid or credited to the account; and
(6) the gross amount of other U.S. source income paid or credited to the account, to the extent
subject to reporting under chapter 3 of subtitle A or chapter 61 of subtitle F of the U.S.
Internal Revenue Code.
46 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
Article 3
Time and Manner of Exchange of Information
1. For purposes of the exchange obligation in Article 2 of this Agreement, the amount and characterization of
payments made with respect to a U.S. Reportable Account may be determined in accordance with the principles of the
tax laws of India, and the amount and characterization of payments made with respect to an Indian Reportable Account
may be determined in accordance with principles of U.S. federal income tax law.
2. For purposes of the exchange obligation in Article 2 of this Agreement, the information exchanged shall
identify the currency in which each relevant amount is denominated.
3. With respect to paragraph 2 of Article 2 of this Agreement, information is to be obtained and exchanged with
respect to 2014 and all subsequent years, except that:
a) In the case of India:
(1) the information to be obtained and exchanged with respect to 2014 is only the information
described in subparagraphs 2(a)(1) through 2(a)(4) of Article 2 of this Agreement;
(2) the information to be obtained and exchanged with respect to 2015 is the information
described in subparagraphs 2(a)(1) through 2(a)(7) of Article 2 of this Agreement, except for
gross proceeds described in subparagraph 2(a)(5)(B) of Article 2 of this Agreement; and
(3) the information to be obtained and exchanged with respect to 2016 and subsequent years is
the information described in subparagraphs 2(a)(1) through 2(a)(7) of Article 2 of this
Agreement;
b) In the case of the United States, the information to be obtained and exchanged with respect to 2014
and subsequent years is all of the information identified in subparagraph 2(b) of Article 2 of this
Agreement.
4. Notwithstanding paragraph 3 of this Article, with respect to each Reportable Account that is maintained by a
Reporting Financial Institution as of June 30, 2014, and subject to paragraph 4 of Article 6 of this Agreement, the
Parties are not required to obtain and include in the exchanged information the Indian TIN or the U.S. TIN, as
applicable, of any relevant person if such taxpayer identifying number is not in the records of the Reporting Financial
Institution. In such a case, the Parties shall obtain and include in the exchanged information the date of birth of the
relevant person, if the Reporting Financial Institution has such date of birth in its records.
5. Subject to paragraphs 3 and 4 of this Article, the information described in Article 2 of this Agreement shall be
exchanged within nine months after the end of the calendar year to which the information relates.
6. The Competent Authorities of India and the United States shall enter into an agreement or arrangement under
the mutual agreement procedure provided for in Article 27 of the Convention, which shall:
a) establish the procedures for the automatic exchange obligations described in Article 2 of this
Agreement;
b) prescribe rules and procedures as may be necessary to implement Article 5 of this Agreement; and
c) establish as necessary procedures for the exchange of the information reported under subparagraph
1(b) of Article 4 of this Agreement.
7. All information exchanged shall be subject to the confidentiality and other protections provided for in the
Convention, including the provisions limiting the use of the information exchanged.
8. Following entry into force of this Agreement, each Competent Authority shall provide written notification to
the other Competent Authority when it is satisfied that the jurisdiction of the other Competent Authority has in place (i)
appropriate safeguards to ensure that the information received pursuant to this Agreement shall remain confidential and
be used solely for tax purposes, and (ii) the infrastructure for an effective exchange relationship (including established
processes for ensuring timely, accurate, and confidential information exchanges, effective and reliable communications,
and demonstrated capabilities to promptly resolve questions and concerns about exchanges or requests for exchanges
and to administer the provisions of Article 5 of this Agreement). The Competent Authorities shall endeavor in good
faith to meet, prior to September 2015, to establish that each jurisdiction has such safeguards and infrastructure in
place.
9. The obligations of the Parties to obtain and exchange information under Article 2 of this Agreement shall take
effect on the date of the later of the written notifications described in paragraph 8 of this Article.
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 47
10. This Agreement shall terminate on September 30, 2015, if Article 2 of this Agreement is not in effect pursuant
to paragraph 9 of this Article by that date.
Article 4
Application of FATCA to Indian Financial Institutions
1. Treatment of Reporting Indian Financial Institutions. Each Reporting Indian Financial Institution shall be
treated as complying with, and not subject to withholding under, section 1471 of the U.S. Internal Revenue Code if
India complies with its obligations under Articles 2 and 3 of this Agreement with respect to such Reporting Indian
Financial Institution, and the Reporting Indian Financial Institution:
a) identifies U.S. Reportable Accounts and reports annually to the Indian Competent Authority the
information required to be reported in subparagraph 2(a) of Article 2 of this Agreement in the time
and manner described in Article 3 of this Agreement;
b) for each of 2015 and 2016, reports annually to the Indian Competent Authority the name of each
Nonparticipating Financial Institution to which it has made payments and the aggregate amount of
such payments;
c) complies with the applicable registration requirements on the IRS FATCA registration website;
d) to the extent that a Reporting Indian Financial Institution is (i) acting as a qualified intermediary (for
purposes of section 1441 of the U.S. Internal Revenue Code) that has elected to assume primary
withholding responsibility under chapter 3 of subtitle A of the U.S. Internal Revenue Code, (ii) a
foreign partnership that has elected to act as a withholding foreign partnership (for purposes of both
sections 1441 and 1471 of the U.S. Internal Revenue Code), or (iii) a foreign trust that has elected to
act as a withholding foreign trust (for purposes of both sections 1441 and 1471 of the U.S. Internal
Revenue Code), withholds 30 percent of any U.S. Source Withholdable Payment to any
Nonparticipating Financial Institution; and
e) in the case of a Reporting Indian Financial Institution that is not described in subparagraph 1(d) of
this Article and that makes a payment of, or acts as an intermediary with respect to, a U.S. Source
Withholdable Payment to any Nonparticipating Financial Institution, the Reporting Indian Financial
Institution provides to any immediate payor of such U.S. Source Withholdable Payment the
information required for withholding and reporting to occur with respect to such payment.
Notwithstanding the foregoing, a Reporting Indian Financial Institution with respect to which the conditions of this
paragraph 1 are not satisfied shall not be subject to withholding under section 1471 of the U.S. Internal Revenue Code
unless such Reporting Indian Financial Institution is treated by the IRS as a Nonparticipating Financial Institution
pursuant to subparagraph 2(b) of Article 5 of this Agreement.
2. Suspension of Rules Relating to Recalcitrant Accounts. The United States shall not require a Reporting
Indian Financial Institution to withhold tax under section 1471 or 1472 of the U.S. Internal Revenue Code with respect
to an account held by a recalcitrant account holder (as defined in section 1471(d)(6) of the U.S. Internal Revenue
Code), or to close such account, if the U.S. Competent Authority receives the information set forth in subparagraph 2(a)
of Article 2 of this Agreement, subject to the provisions of Article 3 of this Agreement, with respect to such account.
3. Specific Treatment of Indian Retirement Plans. The United States shall treat as deemed-compliant FFIs or
exempt beneficial owners, as appropriate, for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code,
Indian retirement plans described in Annex II. For this purpose, an Indian retirement plan includes an Entity
established or located in, and regulated by, India, or a predetermined contractual or legal arrangement, operated to
provide pension or retirement benefits or earn income for providing such benefits under the laws of India and regulated
with respect to contributions, distributions, reporting, sponsorship, and taxation.
4. Identification and Treatment of Other Deemed-Compliant FFIs and Exempt Beneficial Owners. The
United States shall treat each Non-Reporting Indian Financial Institution as a deemed-compliant FFI or as an exempt
beneficial owner, as appropriate, for purposes of section 1471 of the U.S. Internal Revenue Code.
5. Special Rules Regarding Related Entities and Branches That Are Nonparticipating Financial
Institutions. If an Indian Financial Institution, that otherwise meets the requirements described in paragraph 1 of this
Article or is described in paragraph 3 or 4 of this Article, has a Related Entity or branch that operates in a jurisdiction
that prevents such Related Entity or branch from fulfilling the requirements of a participating FFI or deemed-compliant
FFI for purposes of section 1471 of the U.S. Internal Revenue Code or has a Related Entity or branch that is treated as a
Nonparticipating Financial Institution solely due to the expiration of the transitional rule for limited FFIs and limited
branches under relevant U.S. Treasury Regulations, such Indian Financial Institution shall continue to be in compliance
with the terms of this Agreement and shall continue to be treated as a deemed-compliant FFI or exempt beneficial
owner, as appropriate, for purposes of section 1471 of the U.S. Internal Revenue Code, provided that:
48 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
a) the Indian Financial Institution treats each such Related Entity or branch as a separate
Nonparticipating Financial Institution for purposes of all the reporting and withholding requirements
of this Agreement and each such Related Entity or branch identifies itself to withholding agents as a
Nonparticipating Financial Institution;
b) each such Related Entity or branch identifies its U.S. accounts and reports the information with
respect to those accounts as required under section 1471 of the U.S. Internal Revenue Code to the
extent permitted under the relevant laws pertaining to the Related Entity or branch; and
c) such Related Entity or branch does not specifically solicit U.S. accounts held by persons that are not
resident in the jurisdiction where such Related Entity or branch is located or accounts held by
Nonparticipating Financial Institutions that are not established in the jurisdiction where such Related
Entity or branch is located, and such Related Entity or branch is not used by the Indian Financial
Institution or any other Related Entity to circumvent the obligations under this Agreement or under
section 1471 of the U.S. Internal Revenue Code, as appropriate.
6. Coordination of Timing. Notwithstanding paragraphs 3 and 5 of Article 3 of this Agreement:
a) India shall not be obligated to obtain and exchange information with respect to a calendar year that is
prior to the calendar year with respect to which similar information is required to be reported to the
IRS by participating FFIs pursuant to relevant U.S. Treasury Regulations;
b) India shall not be obligated to begin exchanging information prior to the date by which participating
FFIs are required to report similar information to the IRS under relevant U.S. Treasury Regulations;
c) the United States shall not be obligated to obtain and exchange information with respect to a calendar
year that is prior to the first calendar year with respect to which India is required to obtain and
exchange information; and
d) the United States shall not be obligated to begin exchanging information prior to the date by which
India is required to begin exchanging information.
7. Coordination of Definitions with U.S. Treasury Regulations. Notwithstanding Article 1 of this Agreement
and the definitions provided in the Annexes to this Agreement, in implementing this Agreement, India may use, and
may permit Indian Financial Institutions to use, a definition in relevant U.S. Treasury Regulations in lieu of a
corresponding definition in this Agreement, provided that such application would not frustrate the purposes of this
Agreement.
Article 5
Collaboration on Compliance and Enforcement
1. Minor and Administrative Errors. A Competent Authority shall notify the Competent Authority of the other
Party when the first-mentioned Competent Authority has reason to believe that administrative errors or other minor
errors may have led to incorrect or incomplete information reporting or resulted in other infringements of this
Agreement. The Competent Authority of such other Party shall apply its domestic law (including applicable penalties)
to obtain corrected and/or complete information or to resolve other infringements of this Agreement.
2. Significant Non-Compliance.
a) A Competent Authority shall notify the Competent Authority of the other Party when the first-
mentioned Competent Authority has determined that there is significant non-compliance with the
obligations under this Agreement with respect to a Reporting Financial Institution in the other
jurisdiction. The Competent Authority of such other Party shall apply its domestic law (including
applicable penalties) to address the significant non-compliance described in the notice.
b) If, in the case of a Reporting Indian Financial Institution, such enforcement actions do not resolve the
non-compliance within a period of 18 months after notification of significant non-compliance is first
provided, the United States shall treat the Reporting Indian Financial Institution as a Nonparticipating
Financial Institution pursuant to this subparagraph 2(b).
3. Reliance on Third Party Service Providers. Each Party may allow Reporting Financial Institutions to use
third party service providers to fulfill the obligations imposed on such Reporting Financial Institutions by a Party, as
contemplated in this Agreement, but these obligations shall remain the responsibility of the Reporting Financial
Institutions.
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 49
4. Prevention of Avoidance. The Parties shall implement as necessary requirements to prevent Financial
Institutions from adopting practices intended to circumvent the reporting required under this Agreement.
Article 6
Mutual Commitment to Continue to Enhance the Effectiveness of Information Exchange and Transparency
1. Reciprocity. The Government of the United States acknowledges the need to achieve equivalent levels of
reciprocal automatic information exchange with India. The Government of the United States is committed to further
improve transparency and enhance the exchange relationship with India by pursuing the adoption of regulations and
advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic information
exchange.
2. Treatment of Passthru Payments and Gross Proceeds. The Parties are committed to work together, along
with Partner Jurisdictions, to develop a practical and effective alternative approach to achieve the policy objectives of
foreign passthru payment and gross proceeds withholding that minimizes burden.
3. Development of Common Reporting and Exchange Model. The Parties are committed to working with
Partner Jurisdictions and the Organisation for Economic Co-operation and Development on adapting the terms of this
Agreement and other agreements between the United States and Partner Jurisdictions to a common model for automatic
exchange of information, including the development of reporting and due diligence standards for financial institutions.
4. Documentation of Accounts Maintained as of June 30, 2014. With respect to Reportable Accounts
maintained by a Reporting Financial Institution as of June 30, 2014:
a) The United States commits to establish, by January 1, 2017, for reporting with respect to 2017 and
subsequent years, rules requiring Reporting U.S. Financial Institutions to obtain and report the Indian
TIN of each Account Holder of an Indian Reportable Account as required pursuant to subparagraph
2(b)(1) of Article 2 of this Agreement; and
b) India commits to establish, by January 1, 2017, for reporting with respect to 2017 and subsequent
years, rules requiring Reporting Indian Financial Institutions to obtain the U.S. TIN of each Specified
U.S. Person as required pursuant to subparagraph 2(a)(1) of Article 2 of this Agreement.
Article 7
Consistency in the Application of FATCA to Partner Jurisdictions
1. India shall be granted the benefit of any more favorable terms under Article 4 or Annex I of this Agreement
relating to the application of FATCA to Indian Financial Institutions afforded to another Partner Jurisdiction under a
signed bilateral agreement pursuant to which the other Partner Jurisdiction commits to undertake the same obligations
as India described in Articles 2 and 3 of this Agreement, and subject to the same terms and conditions as described
therein and in Articles 5 through 9 of this Agreement.
2. The United States shall notify India of any such more favorable terms, and such more favorable terms shall
apply automatically under this Agreement as if such terms were specified in this Agreement and effective as of the date
of signing of the agreement incorporating the more favorable terms, unless India declines in writing the application
thereof.
Article 8
Consultations and Amendments
1. In case any difficulties in the implementation of this Agreement arise, either Party may request consultations to
develop appropriate measures to ensure the fulfillment of this Agreement.
2. This Agreement may be amended by written mutual agreement of the Parties. Unless otherwise agreed upon, such
an amendment shall enter into force through the same procedures as set forth in paragraph 1 of Article 10 of this
Agreement.
Article 9
Annexes
The Annexes form an integral part of this Agreement.
50 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
Article 10
Term of Agreement
1. This Agreement shall enter into force on the date of India's written notification to the United States that India
has completed its necessary internal procedures for entry into force of this Agreement.
2. Either Party may terminate this Agreement by giving notice of termination in writing to the other Party. Such
termination shall become effective on the first day of the month following the expiration of a period of 12 months after
the date of the notice of termination.
3. The Parties shall, prior to December 31, 2016, consult in good faith to amend this Agreement as necessary to
reflect progress on the commitments set forth in Article 6 of this Agreement.
In witness whereof, the undersigned, being duly authorized thereto by their respective Governments, have signed this
Agreement.
Done at the Government of the Republic of India Ministry of Finance, North Block, New Delhi, India, in duplicate, this
9th day of July, 2015, in the Hindi and English languages, both texts being equally authentic. In case of divergence
between the two texts, the English text shall be the operative one.
FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF THE UNITED
STATES OF AMERICA:
THE REPUBLIC OF INDIA:
Shaktikanta Das Richard R Verma
Revenue Secretary Ambassador
ANNEX I
DUE DILIGENCE OBLIGATIONS FOR IDENTIFYING AND REPORTING ON U.S. REPORTABLE
ACCOUNTS AND ON PAYMENTS TO CERTAIN NONPARTICIPATING FINANCIAL INSTITUTIONS
I. General.
A. India shall require that Reporting Indian Financial Institutions apply the due diligence procedures contained in
this Annex I to identify U.S. Reportable Accounts and accounts held by Nonparticipating Financial
Institutions.
B. For purposes of the Agreement,
1. All dollar amounts are in U.S. dollars and shall be read to include the equivalent in other currencies.
2. Except as otherwise provided herein, the balance or value of an account shall be determined as of the
last day of the calendar year or other appropriate reporting period.
3. Where a balance or value threshold is to be determined as of June 30, 2014 under this Annex I, the
relevant balance or value shall be determined as of that day or the last day of the reporting period
ending immediately before June 30, 2014, and where a balance or value threshold is to be determined
as of the last day of a calendar year under this Annex I, the relevant balance or value shall be
determined as of the last day of the calendar year or other appropriate reporting period.
4. Subject to subparagraph E(1) of section II of this Annex I, an account shall be treated as a U.S.
Reportable Account beginning as of the date it is identified as such pursuant to the due diligence
procedures in this Annex I.
5. Unless otherwise provided, information with respect to a U.S. Reportable Account shall be reported
annually in the calendar year following the year to which the information relates.
II. Preexisting Individual Accounts. The following rules and procedures apply for purposes of identifying U.S.
Reportable Accounts among Preexisting Accounts held by individuals ("Preexisting Individual Accounts").
A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the Reporting Indian
Financial Institution elects otherwise, either with respect to all Preexisting Individual Accounts or, separately,
with respect to any clearly identified group of such accounts, where the implementing rules in India provide
for such an election, the following Preexisting Individual Accounts are not required to be reviewed, identified,
or reported as U.S. Reportable Accounts:
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 51
1. Subject to subparagraph E(2) of this section, a Preexisting Individual Account with a balance or
value that does not exceed $50,000 as of June 30, 2014.
2. Subject to subparagraph E(2) of this section, a Preexisting Individual Account that is a Cash Value
Insurance Contract or an Annuity Contract with a balance or value of $250,000 or less as of June 30,
2014.
3. A Preexisting Individual Account that is a Cash Value Insurance Contract or an Annuity Contract,
provided the law or regulations of India or the United States effectively prevent the sale of such a
Cash Value Insurance Contract or an Annuity Contract to U.S. residents (e.g., if the relevant Financial
Institution does not have the required registration under U.S. law, and the law of India requires
reporting or withholding with respect to insurance products held by residents of India).
4. A Depository Account with a balance of $50,000 or less.
B. Review Procedures for Preexisting Individual Accounts With a Balance or Value as of June 30, 2014,
that Exceeds $50,000 ($250,000 for a Cash Value Insurance Contract or Annuity Contract), But Does
Not Exceed $1,000,000 ("Lower Value Accounts").
1. Electronic Record Search. The Reporting Indian Financial Institution must review electronically
searchable data maintained by the Reporting Indian Financial Institution for any of the following U.S.
indicia:
a) Identification of the Account Holder as a U.S. citizen or resident;
b) Unambiguous indication of a U.S. place of birth;
c) Current U.S. mailing or residence address (including a U.S. post office box);
d) Current U.S. telephone number;
e) Standing instructions to transfer funds to an account maintained in the United States;
f) Currently effective power of attorney or signatory authority granted to a person with a U.S.
address; or
g) An "in-care-of" or "hold mail" address that is the sole address the Reporting Indian
Financial Institution has on file for the Account Holder. In the case of a Preexisting
Individual Account that is a Lower Value Account, an "in-care-of" address outside the
United States or "hold mail" address shall not be treated as U.S. indicia.
2. If none of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the electronic
search, then no further action is required until there is a change in circumstances that results in one or
more U.S. indicia being associated with the account, or the account becomes a High Value Account
described in paragraph D of this section.
3. If any of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the electronic
search, or if there is a change in circumstances that results in one or more U.S. indicia being
associated with the account, then the Reporting Indian Financial Institution must treat the account as
a U.S. Reportable Account unless it elects to apply subparagraph B(4) of this section and one of the
exceptions in such subparagraph applies with respect to that account.
4. Notwithstanding a finding of U.S. indicia under subparagraph B(1) of this section, a Reporting Indian
Financial Institution is not required to treat an account as a U.S. Reportable Account if:
a) Where the Account Holder information unambiguously indicates a U.S. place of birth, the
Reporting Indian Financial Institution obtains, or has previously reviewed and maintains a
record of:
(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S.
resident for tax purposes (which may be on an IRS Form W-8 or other similar
agreed form);
(2) A non-U.S. passport or other government-issued identification evidencing the
Account Holder's citizenship or nationality in a country other than the United
States; and
(3) A copy of the Account Holder's Certificate of Loss of Nationality of the United
States or a reasonable explanation of:
(a) The reason the Account Holder does not have such a certificate despite
relinquishing U.S. citizenship; or
52 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
(b) The reason the Account Holder did not obtain U.S. citizenship at birth.
b) Where the Account Holder information contains a current U.S. mailing or residence
address, or one or more U.S. telephone numbers that are the only telephone numbers
associated with the account, the Reporting Indian Financial Institution obtains, or has
previously reviewed and maintains a record of:
(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S.
resident for tax purposes (which may be on an IRS Form W-8 or other similar
agreed form); and
(2) Documentary evidence, as defined in paragraph D of section VI of this Annex I,
establishing the Account Holder's non-U.S. status.
c) Where the Account Holder information contains standing instructions to transfer funds to
an account maintained in the United States, the Reporting Indian Financial Institution
obtains, or has previously reviewed and maintains a record of:
(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S.
resident for tax purposes (which may be on an IRS Form W-8 or other similar
agreed form); and
(2) Documentary evidence, as defined in paragraph D of section VI of this Annex I,
establishing the Account Holder's non-U.S. status.
d) Where the Account Holder information contains a currently effective power of attorney or
signatory authority granted to a person with a U.S. address, has an "in-care-of" address
or "hold mail" address that is the sole address identified for the Account Holder, or has
one or more U.S. telephone numbers (if a non-U.S. telephone number is also associated
with the account), the Reporting Indian Financial Institution obtains, or has previously
reviewed and maintains a record of:
(1) A self-certification that the Account Holder is neither a U.S. citizen nor a U.S.
resident for tax purposes (which may be on an IRS Form W-8 or other similar
agreed form); or
(2) Documentary evidence, as defined in paragraph D of section VI of this Annex I,
establishing the Account Holder's non-U.S. status.
C. Additional Procedures Applicable to Preexisting Individual Accounts That Are Lower Value Accounts.
1. Review of Preexisting Individual Accounts that are Lower Value Accounts for U.S. indicia must be
completed by June 30, 2016.
2. If there is a change of circumstances with respect to a Preexisting Individual Account that is a Lower
Value Account that results in one or more U.S. indicia described in subparagraph B(1) of this section
being associated with the account, then the Reporting Indian Financial Institution must treat the
account as a U.S. Reportable Account unless subparagraph B(4) of this section applies.
3. Except for Depository Accounts described in subparagraph A(4) of this section, any Preexisting
Individual Account that has been identified as a U.S. Reportable Account under this section shall be
treated as a U.S. Reportable Account in all subsequent years, unless the Account Holder ceases to be
a Specified U.S. Person.
D. Enhanced Review Procedures for Preexisting Individual Accounts With a Balance or Value That
Exceeds $1,000,000 as of June 30, 2014, or December 31 of 2015 or Any Subsequent Year ("High Value
Accounts").
1. Electronic Record Search. The Reporting Indian Financial Institution must review electronically
searchable data maintained by the Reporting Indian Financial Institution for any of the U.S. indicia
described in subparagraph B(1) of this section.
2. Paper Record Search. If the Reporting Indian Financial Institution's electronically searchable
databases include fields for, and capture all of the information described in, subparagraph D(3) of this
section, then no further paper record search is required. If the electronic databases do not capture all
of this information, then with respect to a High Value Account, the Reporting Indian Financial
Institution must also review the current customer master file and, to the extent not contained in the
current customer master file, the following documents associated with the account and obtained by
the Reporting Indian Financial Institution within the last five years for any of the U.S. indicia
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 53
described in subparagraph B(1) of this section:
a) The most recent documentary evidence collected with respect to the account;
b) The most recent account opening contract or documentation;
c) The most recent documentation obtained by the Reporting Indian Financial Institution
pursuant to AML/KYC Procedures or for other regulatory purposes;
d) Any power of attorney or signature authority forms currently in effect; and
e) Any standing instructions to transfer funds currently in effect.
3. Exception Where Databases Contain Sufficient Information. A Reporting Indian Financial
Institution is not required to perform the paper record search described in subparagraph D(2) of this
section if the Reporting Indian Financial Institution's electronically searchable information includes
the following:
a) The Account Holder's nationality or residence status;
b) The Account Holder's residence address and mailing address currently on file with the
Reporting Indian Financial Institution;
c) The Account Holder's telephone number(s) currently on file, if any, with the Reporting
Indian Financial Institution;
d) Whether there are standing instructions to transfer funds in the account to another account
(including an account at another branch of the Reporting Indian Financial Institution or
another Financial Institution);
e) Whether there is a current "in-care-of" address or "hold mail" address for the Account
Holder; and
f) Whether there is any power of attorney or signatory authority for the account.
4. Relationship Manager Inquiry for Actual Knowledge. In addition to the electronic and paper
record searches described above, the Reporting Indian Financial Institution must treat as a U.S.
Reportable Account any High Value Account assigned to a relationship manager (including any
Financial Accounts aggregated with such High Value Account) if the relationship manager has actual
knowledge that the Account Holder is a Specified U.S. Person.
5. Effect of Finding U.S. Indicia.
If none of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the
a)
enhanced review of High Value Accounts described above, and the account is not identified
as held by a Specified U.S. Person in subparagraph D(4) of this section, then no further
action is required until there is a change in circumstances that results in one or more U.S.
indicia being associated with the account.
b) If any of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the
enhanced review of High Value Accounts described above, or if there is a subsequent change
in circumstances that results in one or more U.S. indicia being associated with the account,
then the Reporting Indian Financial Institution must treat the account as a U.S. Reportable
Account unless it elects to apply subparagraph B(4) of this section and one of the exceptions
in such subparagraph applies with respect to that account.
c) Except for Depository Accounts described in subparagraph A(4) of this section, any
Preexisting Individual Account that has been identified as a U.S. Reportable Account under
this section shall be treated as a U.S. Reportable Account in all subsequent years, unless the
Account Holder ceases to be a Specified U.S. Person.
E. Additional Procedures Applicable to High Value Accounts.
1. If a Preexisting Individual Account is a High Value Account as of June 30, 2014, the Reporting Indian
Financial Institution must complete the enhanced review procedures described in paragraph D of this
section with respect to such account by June 30, 2015. If based on this review such account is
identified as a U.S. Reportable Account on or before December 31, 2014, the Reporting Indian
Financial Institution must report the required information about such account with respect to 2014 in
the first report on the account and on an annual basis thereafter. In the case of an account identified
as a U.S. Reportable Account after December 31, 2014 and on or before June 30, 2015, the Reporting
Indian Financial Institution is not required to report information about such account with respect to
2014, but must report information about the account on an annual basis thereafter.
54 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
2. If a Preexisting Individual Account is not a High Value Account as of June 30, 2014, but becomes a
High Value Account as of the last day of 2015 or any subsequent calendar year, the Reporting Indian
Financial Institution must complete the enhanced review procedures described in paragraph D of this
section with respect to such account within six months after the last day of the calendar year in which
the account becomes a High Value Account. If based on this review such account is identified as a
U.S. Reportable Account, the Reporting Indian Financial Institution must report the required
information about such account with respect to the year in which it is identified as a U.S. Reportable
Account and subsequent years on an annual basis, unless the Account Holder ceases to be a Specified
U.S. Person.
3. Once a Reporting Indian Financial Institution applies the enhanced review procedures described in
paragraph D of this section to a High Value Account, the Reporting Indian Financial Institution is not
required to re-apply such procedures, other than the relationship manager inquiry described in
subparagraph D(4) of this section, to the same High Value Account in any subsequent year.
4. If there is a change of circumstances with respect to a High Value Account that results in one or more
U.S. indicia described in subparagraph B(1) of this section being associated with the account, then
the Reporting Indian Financial Institution must treat the account as a U.S. Reportable Account unless
it elects to apply subparagraph B(4) of this section and one of the exceptions in such subparagraph
applies with respect to that account.
5. A Reporting Indian Financial Institution must implement procedures to ensure that a relationship
manager identifies any change in circumstances of an account. For example, if a relationship
manager is notified that the Account Holder has a new mailing address in the United States, the
Reporting Indian Financial Institution is required to treat the new address as a change in
circumstances and, if it elects to apply subparagraph B(4) of this section, is required to obtain the
appropriate documentation from the Account Holder.
F. Preexisting Individual Accounts That Have Been Documented for Certain Other Purposes. A Reporting
Indian Financial Institution that has previously obtained documentation from an Account Holder to establish
the Account Holder's status as neither a U.S. citizen nor a U.S. resident in order to meet its obligations under a
qualified intermediary, withholding foreign partnership, or withholding foreign trust agreement with the IRS,
or to fulfill its obligations under chapter 61 of Title 26 of the United States Code, is not required to perform
the procedures described in subparagraph B(1) of this section with respect to Lower Value Accounts or
subparagraphs D(1) through D(3) of this section with respect to High Value Accounts.
III. New Individual Accounts. The following rules and procedures apply for purposes of identifying U.S. Reportable
Accounts among Financial Accounts held by individuals and opened on or after July 1, 2014 ("New Individual
Accounts").
A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the Reporting Indian Financial
Institution elects otherwise, either with respect to all New Individual Accounts or, separately, with respect to
any clearly identified group of such accounts, where the implementing rules in India provide for such an
election, the following New Individual Accounts are not required to be reviewed, identified, or reported as
U.S. Reportable Accounts:
1. A Depository Account unless the account balance exceeds $50,000 at the end of any calendar year or
other appropriate reporting period.
2. A Cash Value Insurance Contract unless the Cash Value exceeds $50,000 at the end of any calendar
year or other appropriate reporting period.
B. Other New Individual Accounts. With respect to New Individual Accounts not described in paragraph A of
this section, upon account opening (or within 90 days after the end of the calendar year in which the account
ceases to be described in paragraph A of this section), the Reporting Indian Financial Institution must obtain a
self-certification, which may be part of the account opening documentation, that allows the Reporting Indian
Financial Institution to determine whether the Account Holder is resident in the United States for tax purposes
(for this purpose, a U.S. citizen is considered to be resident in the United States for tax purposes, even if the
Account Holder is also a tax resident of another jurisdiction) and confirm the reasonableness of such self-
certification based on the information obtained by the Reporting Indian Financial Institution in connection
with the opening of the account, including any documentation collected pursuant to AML/KYC Procedures.
1. If the self-certification establishes that the Account Holder is resident in the United States for tax
purposes, the Reporting Indian Financial Institution must treat the account as a U.S. Reportable
Account and obtain a self-certification that includes the Account Holder's U.S. TIN (which may be
an IRS Form W-9 or other similar agreed form).
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 55
2. If there is a change of circumstances with respect to a New Individual Account that causes the
Reporting Indian Financial Institution to know, or have reason to know, that the original self-
certification is incorrect or unreliable, the Reporting Indian Financial Institution cannot rely on the
original self-certification and must obtain a valid self-certification that establishes whether the
Account Holder is a U.S. citizen or resident for U.S. tax purposes. If the Reporting Indian Financial
Institution is unable to obtain a valid self-certification, the Reporting Indian Financial Institution
must treat the account as a U.S. Reportable Account.
IV. Preexisting Entity Accounts. The following rules and procedures apply for purposes of identifying U.S.
Reportable Accounts and accounts held by Nonparticipating Financial Institutions among Preexisting Accounts
held by Entities ("Preexisting Entity Accounts").
A. Entity Accounts Not Required to Be Reviewed, Identified or Reported. Unless the Reporting Indian
Financial Institution elects otherwise, either with respect to all Preexisting Entity Accounts or, separately, with
respect to any clearly identified group of such accounts, where the implementing rules in India provide for
such an election, a Preexisting Entity Account with an account balance or value that does not exceed $250,000
as of June 30, 2014, is not required to be reviewed, identified, or reported as a U.S. Reportable Account until
the account balance or value exceeds $1,000,000.
B. Entity Accounts Subject to Review. A Preexisting Entity Account that has an account balance or value that
exceeds $250,000 as of June 30, 2014, and a Preexisting Entity Account that does not exceed $250,000 as of
June 30, 2014 but the account balance or value of which exceeds $1,000,000 as of the last day of 2015 or any
subsequent calendar year, must be reviewed in accordance with the procedures set forth in paragraph D of this
section.
C. Entity Accounts With Respect to Which Reporting is Required. With respect to Preexisting Entity
Accounts described in paragraph B of this section, only accounts that are held by one or more Entities that are
Specified U.S. Persons, or by Passive NFFEs with one or more Controlling Persons who are U.S. citizens or
residents, shall be treated as U.S. Reportable Accounts. In addition, accounts held by Nonparticipating
Financial Institutions shall be treated as accounts for which aggregate payments as described in subparagraph
1(b) of Article 4 of the Agreement are reported to the Indian Competent Authority.
D. Review Procedures for Identifying Entity Accounts With Respect to Which Reporting is Required. For
Preexisting Entity Accounts described in paragraph B of this section, the Reporting Indian Financial Institution
must apply the following review procedures to determine whether the account is held by one or more
Specified U.S. Persons, by Passive NFFEs with one or more Controlling Persons who are U.S. citizens or
residents, or by Nonparticipating Financial Institutions:
1. Determine Whether the Entity Is a Specified U.S. Person.
a) Review information maintained for regulatory or customer relationship purposes (including
information collected pursuant to AML/KYC Procedures) to determine whether the
information indicates that the Account Holder is a U.S. Person. For this purpose,
information indicating that the Account Holder is a U.S. Person includes a U.S. place of
incorporation or organization, or a U.S. address.
b) If the information indicates that the Account Holder is a U.S. Person, the Reporting Indian
Financial Institution must treat the account as a U.S. Reportable Account unless it obtains a
self-certification from the Account Holder (which may be on an IRS Form W-8 or W-9, or a
similar agreed form), or reasonably determines based on information in its possession or that
is publicly available, that the Account Holder is not a Specified U.S. Person.
2. Determine Whether a Non-U.S. Entity Is a Financial Institution.
a) Review information maintained for regulatory or customer relationship purposes (including
information collected pursuant to AML/KYC Procedures) to determine whether the
information indicates that the Account Holder is a Financial Institution.
b) If the information indicates that the Account Holder is a Financial Institution, or the
Reporting Indian Financial Institution verifies the Account Holder's Global Intermediary
Identification Number on the published IRS FFI list, then the account is not a U.S.
Reportable Account.
3. Determine Whether a Financial Institution Is a Nonparticipating Financial Institution
Payments to Which Are Subject to Aggregate Reporting Under Subparagraph 1(b) of Article 4
of the Agreement.
a) Subject to subparagraph D(3)(b) of this section, a Reporting Indian Financial Institution may
56 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
determine that the Account Holder is an Indian Financial Institution or other Partner
Jurisdiction Financial Institution if the Reporting Indian Financial Institution reasonably
determines that the Account Holder has such status on the basis of the Account Holder's
Global Intermediary Identification Number on the published IRS FFI list or other
information that is publicly available or in the possession of the Reporting Indian Financial
Institution, as applicable. In such case, no further review, identification, or reporting is
required with respect to the account.
b) If the Account Holder is an Indian Financial Institution or other Partner Jurisdiction
Financial Institution treated by the IRS as a Nonparticipating Financial Institution, then the
account is not a U.S. Reportable Account, but payments to the Account Holder must be
reported as contemplated in subparagraph 1(b) of Article 4 of the Agreement.
c) If the Account Holder is not an Indian Financial Institution or other Partner Jurisdiction
Financial Institution, then the Reporting Indian Financial Institution must treat the Account
Holder as a Nonparticipating Financial Institution payments to which are reportable under
subparagraph 1(b) of Article 4 of the Agreement, unless the Reporting Indian Financial
Institution:
(1) Obtains a self-certification (which may be on an IRS Form W-8 or similar agreed
form) from the Account Holder that it is a certified deemed-compliant FFI, or an
exempt beneficial owner, as those terms are defined in relevant U.S. Treasury
Regulations; or
(2) In the case of a participating FFI or registered deemed-compliant FFI, verifies the
Account Holder's Global Intermediary Identification Number on the published IRS
FFI list.
4. Determine Whether an Account Held by an NFFE is a U.S. Reportable Account. With respect to
an Account Holder of a Preexisting Entity Account that is not identified as either a U.S. Person or a
Financial Institution, the Reporting Indian Financial Institution must identify (i) whether the Account
Holder has Controlling Persons, (ii) whether the Account Holder is a Passive NFFE, and (iii) whether
any of the Controlling Persons of the Account Holder is a U.S. citizen or resident. In making these
determinations the Reporting Indian Financial Institution must follow the guidance in subparagraphs
D(4)(a) through D(4)(d) of this section in the order most appropriate under the circumstances.
a) For purposes of determining the Controlling Persons of an Account Holder, a Reporting
Indian Financial Institution may rely on information collected and maintained pursuant to
AML/KYC Procedures.
b) For purposes of determining whether the Account Holder is a Passive NFFE, the Reporting
Indian Financial Institution must obtain a self-certification (which may be on an IRS Form
W-8 or W-9, or on a similar agreed form) from the Account Holder to establish its status,
unless it has information in its possession or that is publicly available, based on which it can
reasonably determine that the Account Holder is an Active NFFE.
c) For purposes of determining whether a Controlling Person of a Passive NFFE is a U.S.
citizen or resident for tax purposes, a Reporting Indian Financial Institution may rely on:
(1) Information collected and maintained pursuant to AML/KYC Procedures in the
case of a Preexisting Entity Account held by one or more NFFEs with an account
balance or value that does not exceed $1,000,000; or
(2) A self-certification (which may be on an IRS Form W-8 or W-9, or on a similar
agreed form) from the Account Holder or such Controlling Person in the case of a
Preexisting Entity Account held by one or more NFFEs with an account balance or
value that exceeds $1,000,000.
d) If any Controlling Person of a Passive NFFE is a U.S. citizen or resident, the account shall
be treated as a U.S. Reportable Account.
E. Timing of Review and Additional Procedures Applicable to Preexisting Entity Accounts.
1. Review of Preexisting Entity Accounts with an account balance or value that exceeds $250,000 as of
June 30, 2014 must be completed by June 30, 2016.
2. Review of Preexisting Entity Accounts with an account balance or value that does not exceed
$250,000 as of June 30, 2014, but exceeds $1,000,000 as of December 31 of 2015 or any subsequent
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 57
year, must be completed within six months after the last day of the calendar year in which the account
balance or value exceeds $1,000,000.
3. If there is a change of circumstances with respect to a Preexisting Entity Account that causes the
Reporting Indian Financial Institution to know, or have reason to know, that the self-certification or
other documentation associated with an account is incorrect or unreliable, the Reporting Indian
Financial Institution must redetermine the status of the account in accordance with the procedures set
forth in paragraph D of this section.
V. New Entity Accounts. The following rules and procedures apply for purposes of identifying U.S. Reportable
Accounts and accounts held by Nonparticipating Financial Institutions among Financial Accounts held by Entities
and opened on or after July 1, 2014 ("New Entity Accounts").
A. Entity Accounts Not Required to Be Reviewed, Identified or Reported. Unless the Reporting Indian
Financial Institution elects otherwise, either with respect to all New Entity Accounts or, separately, with
respect to any clearly identified group of such accounts, where the implementing rules in India provide for
such election, a credit card account or a revolving credit facility treated as a New Entity Account is not
required to be reviewed, identified, or reported, provided that the Reporting Indian Financial Institution
maintaining such account implements policies and procedures to prevent an account balance owed to the
Account Holder that exceeds $50,000.
B. Other New Entity Accounts. With respect to New Entity Accounts not described in paragraph A of this
section, the Reporting Indian Financial Institution must determine whether the Account Holder is: (i) a
Specified U.S. Person; (ii) an Indian Financial Institution or other Partner Jurisdiction Financial Institution;
(iii) a participating FFI, a deemed-compliant FFI, or an exempt beneficial owner, as those terms are defined in
relevant U.S. Treasury Regulations; or (iv) an Active NFFE or Passive NFFE.
1. Subject to subparagraph B(2) of this section, a Reporting Indian Financial Institution may determine
that the Account Holder is an Active NFFE, an Indian Financial Institution, or other Partner
Jurisdiction Financial Institution if the Reporting Indian Financial Institution reasonably determines
that the Account Holder has such status on the basis of the Account Holder's Global Intermediary
Identification Number or other information that is publicly available or in the possession of the
Reporting Indian Financial Institution, as applicable.
2. If the Account Holder is an Indian Financial Institution or other Partner Jurisdiction Financial
Institution treated by the IRS as a Nonparticipating Financial Institution, then the account is not a
U.S. Reportable Account, but payments to the Account Holder must be reported as contemplated in
subparagraph 1(b) of Article 4 of the Agreement.
3. In all other cases, a Reporting Indian Financial Institution must obtain a self-certification from the
Account Holder to establish the Account Holder's status. Based on the self-certification, the
following rules apply:
a) If the Account Holder is a Specified U.S. Person, the Reporting Indian Financial
Institution must treat the account as a U.S. Reportable Account.
b) If the Account Holder is a Passive NFFE, the Reporting Indian Financial
Institution must identify the Controlling Persons as determined under AML/KYC
Procedures, and must determine whether any such person is a U.S. citizen or resident on the
basis of a self-certification from the Account Holder or such person. If any such person is a
U.S. citizen or resident, the Reporting Indian Financial Institution must treat the account as a
U.S. Reportable Account.
c) If the Account Holder is: (i) a U.S. Person that is not a Specified U.S. Person; (ii)
subject to subparagraph B(3)(d) of this section, an Indian Financial Institution or other
Partner Jurisdiction Financial Institution; (iii) a participating FFI, a deemed-compliant FFI,
or an exempt beneficial owner, as those terms are defined in relevant U.S. Treasury
Regulations; (iv) an Active NFFE; or (v) a Passive NFFE none of the Controlling Persons of
which is a U.S. citizen or resident, then the account is not a U.S. Reportable Account, and no
reporting is required with respect to the account.
d) If the Account Holder is a Nonparticipating Financial Institution (including an
Indian Financial Institution or other Partner Jurisdiction Financial Institution treated by the
IRS as a Nonparticipating Financial Institution), then the account is not a U.S. Reportable
Account, but payments to the Account Holder must be reported as contemplated in
subparagraph 1(b) of Article 4 of the Agreement.
VI. Special Rules and Definitions. The following additional rules and definitions apply in implementing the due
58 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
diligence procedures described above:
A. Reliance on Self-Certifications and Documentary Evidence. A Reporting Indian Financial
Institution may not rely on a self-certification or documentary evidence if the Reporting Indian Financial
Institution knows or has reason to know that the self-certification or documentary evidence is incorrect or
unreliable.
B. Definitions. The following definitions apply for purposes of this Annex I.
1. AML/KYC Procedures. "AML/KYC Procedures" means the customer due diligence
procedures of a Reporting Indian Financial Institution pursuant to the anti-money laundering or
similar requirements of India to which such Reporting Indian Financial Institution is subject.
2. NFFE. An "NFFE" means any Non-U.S. Entity that is not an FFI as defined in relevant U.S.
Treasury Regulations or is an Entity described in subparagraph B(4)(j) of this section, and also
includes any Non-U.S. Entity that is established in India or another Partner Jurisdiction and that
is not a Financial Institution.
3. Passive NFFE. A "Passive NFFE" means any NFFE that is not (i) an Active NFFE, or (ii) a
withholding foreign partnership or withholding foreign trust pursuant to relevant U.S. Treasury
Regulations.
4. Active NFFE. An "Active NFFE" means any NFFE that meets any of the following criteria:
a) Less than 50 percent of the NFFE's gross income for the preceding calendar year or
other appropriate reporting period is passive income and less than 50 percent of the
assets held by the NFFE during the preceding calendar year or other appropriate
reporting period are assets that produce or are held for the production of passive
income;
b) The stock of the NFFE is regularly traded on an established securities market or the
NFFE is a Related Entity of an Entity the stock of which is regularly traded on an
established securities market;
c) The NFFE is organized in a U.S. Territory and all of the owners of the payee are bona
fide residents of that U.S. Territory;
d) The NFFE is a government (other than the U.S. government), a political subdivision of
such government (which, for the avoidance of doubt, includes a state, province, county,
or municipality), or a public body performing a function of such government or a
political subdivision thereof, a government of a U.S. Territory, an international
organization, a non-U.S. central bank of issue, or an Entity wholly owned by one or
more of the foregoing;
e) Substantially all of the activities of the NFFE consist of holding (in whole or in part) the
outstanding stock of, or providing financing and services to, one or more subsidiaries
that engage in trades or businesses other than the business of a Financial Institution,
except that an entity shall not qualify for NFFE status if the entity functions (or holds
itself out) as an investment fund, such as a private equity fund, venture capital fund,
leveraged buyout fund, or any investment vehicle whose purpose is to acquire or fund
companies and then hold interests in those companies as capital assets for investment
purposes;
f) The NFFE is not yet operating a business and has no prior operating history, but is
investing capital into assets with the intent to operate a business other than that of a
Financial Institution, provided that the NFFE shall not qualify for this exception after
the date that is 24 months after the date of the initial organization of the NFFE;
g) The NFFE was not a Financial Institution in the past five years, and is in the process of
liquidating its assets or is reorganizing with the intent to continue or recommence
operations in a business other than that of a Financial Institution;
h) The NFFE primarily engages in financing and hedging transactions with, or for, Related
Entities that are not Financial Institutions, and does not provide financing or hedging
services to any Entity that is not a Related Entity, provided that the group of any such
Related Entities is primarily engaged in a business other than that of a Financial
Institution;
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 59
i) The NFFE is an "excepted NFFE" as described in relevant U.S. Treasury Regulations;
or
j) The NFFE meets all of the following requirements:
i. It is established and operated in its jurisdiction of residence exclusively for
religious, charitable, scientific, artistic, cultural, athletic, or educational purposes;
or it is established and operated in its jurisdiction of residence and it is a
professional organization, business league, chamber of commerce, labor
organization, agricultural or horticultural organization, civic league or an
organization operated exclusively for the promotion of social welfare;
ii. It is exempt from income tax in its jurisdiction of residence;
iii. It has no shareholders or members who have a proprietary or beneficial interest
in its income or assets;
iv. The applicable laws of the NFFE's jurisdiction of residence or the NFFE's
formation documents do not permit any income or assets of the NFFE to be
distributed to, or applied for the benefit of, a private person or non-charitable
Entity other than pursuant to the conduct of the NFFE's charitable activities, or
as payment of reasonable compensation for services rendered, or as payment
representing the fair market value of property which the NFFE has purchased;
and
v. The applicable laws of the NFFE's jurisdiction of residence or the NFFE's
formation documents require that, upon the NFFE's liquidation or dissolution, all
of its assets be distributed to a governmental entity or other non-profit
organization, or escheat to the government of the NFFE's jurisdiction of
residence or any political subdivision thereof.
5. Preexisting Account. A "Preexisting Account" means a Financial Account maintained by a
Reporting Financial Institution as of June 30, 2014.
C. Account Balance Aggregation and Currency Translation Rules.
1. Aggregation of Individual Accounts. For purposes of determining the aggregate balance
or value of Financial Accounts held by an individual, a Reporting Indian Financial Institution is
required to aggregate all Financial Accounts maintained by the Reporting Indian Financial Institution,
or by a Related Entity, but only to the extent that the Reporting Indian Financial Institution's
computerized systems link the Financial Accounts by reference to a data element such as client
number or taxpayer identification number, and allow account balances or values to be aggregated.
Each holder of a jointly held Financial Account shall be attributed the entire balance or value of the
jointly held Financial Account for purposes of applying the aggregation requirements described in
this paragraph 1.
2. Aggregation of Entity Accounts. For purposes of determining the aggregate balance or
value of Financial Accounts held by an Entity, a Reporting Indian Financial Institution is required to
take into account all Financial Accounts that are maintained by the Reporting Indian Financial
Institution, or by a Related Entity, but only to the extent that the Reporting Indian Financial
Institution's computerized systems link the Financial Accounts by reference to a data element such as
client number or taxpayer identification number, and allow account balances or values to be
aggregated.
3. Special Aggregation Rule Applicable to Relationship Managers. For purposes of
determining the aggregate balance or value of Financial Accounts held by a person to determine
whether a Financial Account is a High Value Account, a Reporting Indian Financial Institution is also
required, in the case of any Financial Accounts that a relationship manager knows, or has reason to
know, are directly or indirectly owned, controlled, or established (other than in a fiduciary capacity)
by the same person, to aggregate all such accounts.
4. Currency Translation Rule. For purposes of determining the balance or value of Financial
Accounts denominated in a currency other than the U.S. dollar, a Reporting Indian Financial
Institution must convert the U.S. dollar threshold amounts described in this Annex I into such
60 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
currency using a published spot rate determined as of the last day of the calendar year preceding the
year in which the Reporting Indian Financial Institution is determining the balance or value.
D. Documentary Evidence. For purposes of this Annex I, acceptable documentary evidence includes
any of the following:
1. A certificate of residence issued by an authorized government body (for example, a
government or agency thereof, or a municipality) of the jurisdiction in which the payee claims to be a
resident.
2. With respect to an individual, any valid identification issued by an authorized government
body (for example, a government or agency thereof, or a municipality), that includes the individual's
name and is typically used for identification purposes.
3. With respect to an Entity, any official documentation issued by an authorized government
body (for example, a government or agency thereof, or a municipality) that includes the name of the
Entity and either the address of its principal office in the jurisdiction (or U.S. Territory) in which it
claims to be a resident or the jurisdiction (or U.S. Territory) in which the Entity was incorporated or
organized.
4. With respect to a Financial Account maintained in a jurisdiction with anti-money laundering
rules that have been approved by the IRS in connection with a QI agreement (as described in relevant
U.S. Treasury Regulations), any of the documents, other than a Form W-8 or W-9, referenced in the
jurisdiction's attachment to the QI agreement for identifying individuals or Entities.
5. Any financial statement, third-party credit report, bankruptcy filing, or U.S. Securities and
Exchange Commission report.
E. Alternative Procedures for Financial Accounts Held by Individual Beneficiaries of a Cash
Value Insurance Contract. A Reporting Indian Financial Institution may presume that an individual
beneficiary (other than the owner) of a Cash Value Insurance Contract receiving a death benefit is not a
Specified U.S. Person and may treat such Financial Account as other than a U.S. Reportable Account unless
the Reporting Indian Financial Institution has actual knowledge, or reason to know, that the beneficiary is a
Specified U.S. Person. A Reporting Indian Financial Institution has reason to know that a beneficiary of a
Cash Value Insurance Contract is a Specified U.S. Person if the information collected by the Reporting Indian
Financial Institution and associated with the beneficiary contains U.S. indicia as described in subparagraph
B(1) of section II of this Annex I. If a Reporting Indian Financial Institution has actual knowledge, or reason
to know, that the beneficiary is a Specified U.S. Person, the Reporting Indian Financial Institution must follow
the procedures in subparagraph B(3) of section II of this Annex I.
F. Reliance on Third Parties. Regardless of whether an election is made under paragraph C of section
I of this Annex I, India may permit Reporting Indian Financial Institutions to rely on due diligence procedures
performed by third parties, to the extent provided in relevant U.S. Treasury Regulations.
G. Alternative Procedures for New Accounts Opened Prior to Entry Into Force of this Agreement.
1. Applicability. If India has provided a written notice to the United States prior to entry into
force of this Agreement that, as of July 1, 2014, India lacked the legal authority to require Reporting
Indian Financial Institutions either: (i) to require Account Holders of New Individual Accounts to
provide the self-certification specified in section III of this Annex I, or (ii) to perform all the due
diligence procedures related to New Entity Accounts specified in section V of this Annex I, then
Reporting Indian Financial Institutions may apply the alternative procedures described in
subparagraph G(2) of this section, as applicable, to such New Accounts, in lieu of the procedures
otherwise required under this Annex I. The alternative procedures described in subparagraph G(2) of
this section shall be available only for those New Individual Accounts or New Entity Accounts, as
applicable, opened prior to the earlier of: (i) the date India has the ability to compel Reporting Indian
Financial Institutions to comply with the due diligence procedures described in section III or section
V of this Annex I, as applicable, which date India shall inform the United States of in writing by the
date of entry into force of this Agreement, or (ii) the date of entry into force of this Agreement. If the
alternative procedures for New Entity Accounts opened on or after July 1, 2014, and before January
1, 2015, described in paragraph H of this section are applied with respect to all New Entity Accounts
or a clearly identified group of such accounts, the alternative procedures described in this paragraph
G may not be applied with respect to such New Entity Accounts. For all other New Accounts,
Reporting Indian Financial Institutions must apply the due diligence procedures described in section
III or section V of this Annex I, as applicable, to determine if the account is a U.S. Reportable
Account or an account held by a Nonparticipating Financial Institution.
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 61
2. Alternative Procedures.
a) Within one year after the date of entry into force of this Agreement, Reporting Indian
Financial Institutions must: (i) with respect to a New Individual Account described in subparagraph
G(1) of this section, request the self-certification specified in section III of this Annex I and confirm
the reasonableness of such self-certification consistent with the procedures described in section III of
this Annex I, and (ii) with respect to a New Entity Account described in subparagraph G(1) of this
section, perform the due diligence procedures specified in section V of this Annex I and request
information as necessary to document the account, including any self-certification, required by
section V of this Annex I.
b) India must report on any New Account that is identified pursuant to subparagraph G(2)(a) of this
section as a U.S. Reportable Account or as an account held by a Nonparticipating Financial
Institution, as applicable, by the date that is the later of: (i) September 30 next following the date that
the account is identified as a U.S. Reportable Account or as an account held by a Nonparticipating
Financial Institution, as applicable, or (ii) 90 days after the account is identified as a U.S. Reportable
Account or as an account held by a Nonparticipating Financial Institution, as applicable. The
information required to be reported with respect to such a New Account is any information that would
have been reportable under this Agreement if the New Account had been identified as a U.S.
Reportable Account or as an account held by a Nonparticipating Financial Institution, as applicable,
as of the date the account was opened.
c) By the date that is one year after the date of entry into force of this Agreement, Reporting
Indian Financial Institutions must close any New Account described in subparagraph G(1) of this
section for which it was unable to collect the required self-certification or other documentation
pursuant to the procedures described in subparagraph G(2)(a) of this section. In addition, by the date
that is one year after the date of entry into force of this Agreement, Reporting Indian Financial
Institutions must: (i) with respect to such closed accounts that prior to such closure were New
Individual Accounts (without regard to whether such accounts were High Value Accounts), perform
the due diligence procedures specified in paragraph D of section II of this Annex I, or (ii) with respect
to such closed accounts that prior to such closure were New Entity Accounts, perform the due
diligence procedures specified in section IV of this Annex I.
d) India must report on any closed account that is identified pursuant to subparagraph G(2)(c)
of this section as a U.S. Reportable Account or as an account held by a Nonparticipating Financial
Institution, as applicable, by the date that is the later of: (i) September 30 next following the date that
the account is identified as a U.S. Reportable Account or as an account held by a Nonparticipating
Financial Institution, as applicable, or (ii) 90 days after the account is identified as a U.S. Reportable
Account or as an account held by a Nonparticipating Financial Institution, as applicable. The
information required to be reported for such a closed account is any information that would have been
reportable under this Agreement if the account had been identified as a U.S. Reportable Account or as
an account held by a Nonparticipating Financial Institution, as applicable, as of the date the account
was opened.
H. Alternative Procedures for New Entity Accounts Opened on or after July 1, 2014, and before
January 1, 2015. For New Entity Accounts opened on or after July 1, 2014, and before January 1, 2015,
either with respect to all New Entity Accounts or, separately, with respect to any clearly identified group of
such accounts, India may permit Reporting Indian Financial Institutions to treat such accounts as Preexisting
Entity Accounts and apply the due diligence procedures related to Preexisting Entity Accounts specified in
section IV of this Annex I in lieu of the due diligence procedures specified in section V of this Annex I. In this
case, the due diligence procedures of section IV of this Annex I must be applied without regard to the account
balance or value threshold specified in paragraph A of section IV of this Annex I.
Annex II
The following Entities shall be treated as exempt beneficial owners or deemed-compliant FFIs, as the case may be, and
the following accounts are excluded from the definition of Financial Accounts.
This Annex II may be modified by a mutual written decision entered into between the Competent Authorities of India
and the United States: (1) to include additional Entities and accounts that present a low risk of being used by U.S.
Persons to evade U.S. tax and that have similar characteristics to the Entities and accounts described in this Annex II as
of the date of signature of the Agreement; or (2) to remove Entities and accounts that, due to changes in circumstances,
62 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
no longer present a low risk of being used by U.S. Persons to evade U.S. tax. Any such addition or removal shall be
effective on the date of signature of the mutual decision, unless otherwise provided therein. Procedures for reaching
such a mutual decision may be included in the mutual agreement or arrangement described in paragraph 6 of Article 3
of the Agreement.
I. Exempt Beneficial Owners other than Funds. The following Entities shall be treated as Non-Reporting Indian
Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal
Revenue Code, other than with respect to a payment that is derived from an obligation held in connection with a
commercial financial activity of a type engaged in by a Specified Insurance Company, Custodial Institution, or
Depository Institution.
A. Governmental Entity. The government of India, any political subdivision of India (which, for the avoidance
of doubt, includes a state, province, county, or municipality), or any wholly owned agency or instrumentality
of India, board, corporation, authority or any other body established or constituted under an act of the
Government of India or of its political subdivisions or any one or more of the foregoing (each, an "Indian
Governmental Entity"). This category is comprised of the integral parts, controlled entities, and political
subdivisions of India.
1. An integral part of India means any person, organization, agency, bureau, fund, instrumentality, or other
body, however designated, that constitutes a governing authority of India. The net earnings of the
governing authority must be credited to its own account or to other accounts of India, with no portion
inuring to the benefit of any private person. An integral part does not include any individual who is a
sovereign, official, or administrator acting in a private or personal capacity.
2. A controlled entity means an Entity that is separate in form from India or that otherwise constitutes a
separate juridical entity, provided that:
a) The Entity is wholly owned and controlled by one or more Indian Governmental Entities directly or
through one or more controlled entities;
b) The Entity's net earnings are credited to its own account or to the accounts of one or more Indian
Governmental Entities, with no portion of its income inuring to the benefit of any private person; and
c) The Entity's assets vest in one or more Indian Governmental Entities upon dissolution.
3. Income does not inure to the benefit of private persons if such persons are the intended beneficiaries of a
governmental program, and the program activities are performed for the general public with respect to the
common welfare or relate to the administration of some phase of government. Notwithstanding the
foregoing, however, income is considered to inure to the benefit of private persons if the income is
derived from the use of a governmental entity to conduct a commercial business, such as a commercial
banking business, that provides financial services to private persons.
B. International Organization. Any international organization or wholly owned agency or instrumentality
thereof. This category includes any intergovernmental organization (including a supranational organization)
(1) that is comprised primarily of non-U.S. governments; (2) that has in effect a headquarters agreement with
India; and (3) the income of which does not inure to the benefit of private persons.
C. Central Bank. An institution that is by law or government sanction the principal authority, other than the
government of India itself, issuing instruments intended to circulate as currency. Such an institution may
include an instrumentality that is separate from the government of India, whether or not owned in whole or in
part by India.
II. Funds that Qualify as Exempt Beneficial Owners. The following Entities shall be treated as Non-Reporting
Indian Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S.
Internal Revenue Code.
A. Treaty-Qualified Retirement Fund. A fund established in India, provided that the fund is entitled to benefits
under an income tax treaty between India and the United States on income that it derives from sources within
the United States (or would be entitled to such benefits if it derived any such income) as a resident of India
that satisfies any applicable limitation on benefits requirement, and is operated principally to administer or
provide pension or retirement benefits.
B. Broad Participation Retirement Fund. A fund established in India to provide retirement, disability, or death
benefits, or any combination thereof, to beneficiaries that are current or former employees (or persons
designated by such employees) of one or more employers in consideration for services rendered, provided that
the fund:
1. Does not have a single beneficiary with a right to more than five percent of the fund's assets;
2. Is subject to government regulation and provides annual information reporting about its beneficiaries to
the relevant tax authorities in India; and
3. Satisfies at least one of the following requirements:
a) The fund is generally exempt from tax in India on investment income under the laws of India due to
its status as a retirement or pension plan;
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 63
b) The fund receives at least 50 percent of its total contributions (other than transfers of assets from
other plans described in paragraphs A through D of this section or from retirement and pension
accounts described in subparagraph A(1) of section V of this Annex II) from the sponsoring
employers;
c) Distributions or withdrawals from the fund are allowed only upon the occurrence of specified events
related to retirement, disability, or death (except rollover distributions to other retirement funds
described in paragraphs A through D of this section or retirement and pension accounts described in
subparagraph A(1) of section V of this Annex II), or penalties apply to distributions or withdrawals
made before such specified events; or
d) Contributions (other than certain permitted make-up contributions) by employees to the fund are
limited by reference to earned income of the employee or may not exceed $50,000 annually, applying
the rules set forth in Annex I for account aggregation and currency translation.
C. Narrow Participation Retirement Fund. A fund established in India to provide retirement, disability, or
death benefits to beneficiaries that are current or former employees (or persons designated by such employees)
of one or more employers in consideration for services rendered, provided that:
1. The fund has fewer than 50 participants;
2. The fund is sponsored by one or more employers that are not Investment Entities or Passive NFFEs;
3. The employee and employer contributions to the fund (other than transfers of assets from treaty-qualified
retirement funds described in paragraph A of this section or retirement and pension accounts described in
subparagraph A(1) of section V of this Annex II) are limited by reference to earned income and
compensation of the employee, respectively;
4. Participants that are not residents of India are not entitled to more than 20 percent of the fund's assets; and
5. The fund is subject to government regulation and provides annual information reporting about its
beneficiaries to the relevant tax authorities in India.
D. Pension Fund of an Exempt Beneficial Owner. A fund established in India by an exempt beneficial owner
to provide retirement, disability, or death benefits to beneficiaries or participants that are current or former
employees of the exempt beneficial owner (or persons designated by such employees), or that are not current
or former employees, if the benefits provided to such beneficiaries or participants are in consideration of
personal services performed for the exempt beneficial owner.
E. Investment Entity Wholly Owned by Exempt Beneficial Owners. An Entity that is an Indian Financial
Institution solely because it is an Investment Entity, provided that each direct holder of an Equity Interest in
the Entity is an exempt beneficial owner, and each direct holder of a debt interest in such Entity is either a
Depository Institution (with respect to a loan made to such Entity) or an exempt beneficial owner.
F. Regimental Fund or Non-public Fund of the Armed Forces. A fund established in India as a regimental
fund or non-public fund by the armed forces of the Union of India for the welfare of the current and former
members of the armed forces and whose income is exempt from tax under section 10(23AA) of the Indian
Income-tax Act of 1961.
G. Employees' State Insurance Fund. A fund established in India as an Employees' State Insurance Fund
under the provisions of the Employees' State Insurance Act of 1948, to provide medical expenses of low-
income factory workers in India.
H. Gratuity Funds. A fund established in India under the Payment of Gratuity Act of 1972, to provide for the
payment of a gratuity to certain types of employees (e.g., factory and mining workers) of an Indian employer
specified in the Payment of Gratuity Act of 1972.
I. Provident Fund. A fund established in India under the Provident Fund Act of 1952 or the Employees'
Provident Funds and Miscellaneous Act of 1952 to provide current and former employees of Indian employers
retirement benefits in consideration for services rendered, provided that fund:
1. Does not have a single beneficiary with a right to more than five percent of the fund's assets;
2. Is subject to government regulation and provides annual information reporting about its beneficiaries to
the relevant tax authorities in India;
3. The fund is generally exempt from tax in India on investment income under the laws of India due to its
status as a Provident Fund; and
4. Contributions (other than certain permitted make-up contributions) by employees to the fund are limited
by reference to earned income of the employee or may not exceed $50,000 annually, applying the rules
set forth in Annex I for account aggregation and currency translation.
III. Small or Limited Scope Financial Institutions that Qualify as Deemed-Compliant FFIs. The following
Financial Institutions are Non-Reporting Indian Financial Institutions that shall be treated as deemed-compliant
FFIs for purposes of section 1471 of the U.S. Internal Revenue Code.
A. Financial Institution with a Local Client Base. A Financial Institution satisfying the following
requirements:
1. The Financial Institution must be licensed and regulated as a financial institution under the laws of India;
64 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
2. The Financial Institution must have no fixed place of business outside of India. For this purpose, a fixed
place of business does not include a location that is not advertised to the public and from which the
Financial Institution performs solely administrative support functions;
3. The Financial Institution must not solicit customers or Account Holders outside India. For this purpose, a
Financial Institution shall not be considered to have solicited customers or Account Holders outside India
merely because the Financial Institution (a) operates a website, provided that the website does not
specifically indicate that the Financial Institution provides Financial Accounts or services to nonresidents,
and does not otherwise target or solicit U.S. customers or Account Holders, or (b) advertises in print
media or on a radio or television station that is distributed or aired primarily within India but is also
incidentally distributed or aired in other countries, provided that the advertisement does not specifically
indicate that the Financial Institution provides Financial Accounts or services to nonresidents, and does
not otherwise target or solicit U.S. customers or Account Holders;
4. The Financial Institution must be required under the laws of India to identify resident Account Holders for
purposes of either information reporting or withholding of tax with respect to Financial Accounts held by
residents or for purposes of satisfying India's AML due diligence requirements;
5. At least 98 percent of the Financial Accounts by value maintained by the Financial Institution must be
held by residents (including residents that are Entities) of India;
6. Beginning on or before July 1, 2014, the Financial Institution must have policies and procedures,
consistent with those set forth in Annex I, to prevent the Financial Institution from providing a Financial
Account to any Nonparticipating Financial Institution and to monitor whether the Financial Institution
opens or maintains a Financial Account for any Specified U.S. Person who is not a resident of India
(including a U.S. Person that was a resident of India when the Financial Account was opened but
subsequently ceases to be a resident of India) or any Passive NFFE with Controlling Persons who are U.S.
residents or U.S. citizens who are not residents of India;
7. Such policies and procedures must provide that if any Financial Account held by a Specified U.S. Person
who is not a resident of India or by a Passive NFFE with Controlling Persons who are U.S. residents or
U.S. citizens who are not residents of India is identified, the Financial Institution must report such
Financial Account as would be required if the Financial Institution were a Reporting Indian Financial
Institution (including by following the applicable registration requirements on the IRS FATCA registration
website) or close such Financial Account;
8. With respect to a Preexisting Account held by an individual who is not a resident of India or by an Entity,
the Financial Institution must review those Preexisting Accounts in accordance with the procedures set
forth in Annex I applicable to Preexisting Accounts to identify any U.S. Reportable Account or Financial
Account held by a Nonparticipating Financial Institution, and must report such Financial Account as
would be required if the Financial Institution were a Reporting Indian Financial Institution (including by
following the applicable registration requirements on the IRS FATCA registration website) or close such
Financial Account;
9. Each Related Entity of the Financial Institution that is a Financial Institution must be incorporated or
organized in India and, with the exception of any Related Entity that is a retirement fund described in
paragraphs A through D of section II of this Annex II, satisfy the requirements set forth in this paragraph
A; and
10. The Financial Institution must not have policies or practices that discriminate against opening or
maintaining Financial Accounts for individuals who are Specified U.S. Persons and residents of India.
B. Local Bank. A Financial Institution satisfying the following requirements:
1. The Financial Institution operates solely as (and is licensed and regulated under the laws of India as) (a) a
bank or (b) a credit union or similar cooperative credit organization that is operated without profit;
2. The Financial Institution's business consists primarily of receiving deposits from and making loans to,
with respect to a bank, unrelated retail customers and, with respect to a credit union or similar cooperative
credit organization, members, provided that no member has a greater than five percent interest in such
credit union or cooperative credit organization;
3. The Financial Institution satisfies the requirements set forth in subparagraphs A(2) and A(3) of this
section, provided that, in addition to the limitations on the website described in subparagraph A(3) of this
section, the website does not permit the opening of a Financial Account;
4. The Financial Institution does not have more than $175 million in assets on its balance sheet, and the
Financial Institution and any Related Entities, taken together, do not have more than $500 million in total
assets on their consolidated or combined balance sheets; and
5. Any Related Entity must be incorporated or organized in India, and any Related Entity that is a Financial
Institution, with the exception of any Related Entity that is a retirement fund described in paragraphs A
through D of section II of this Annex II or a Financial Institution with only low-value accounts described
in paragraph C of this section, must satisfy the requirements set forth in this paragraph B.
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 65
C. Financial Institution with Only Low-Value Accounts. An Indian Financial Institution satisfying the
following requirements:
1. The Financial Institution is not an Investment Entity;
2. No Financial Account maintained by the Financial Institution or any Related Entity has a balance or
value in excess of $50,000, applying the rules set forth in Annex I for account aggregation and currency
translation; and
3. The Financial Institution does not have more than $50 million in assets on its balance sheet, and the
Financial Institution and any Related Entities, taken together, do not have more than $50 million in total
assets on their consolidated or combined balance sheets.
D. Qualified Credit Card Issuer. An Indian Financial Institution satisfying the following requirements:
1. The Financial Institution is a Financial Institution solely because it is an issuer of credit cards that accepts
deposits only when a customer makes a payment in excess of a balance due with respect to the card and
the overpayment is not immediately returned to the customer; and
2. Beginning on or before July 1, 2014, the Financial Institution implements policies and procedures to
either prevent a customer deposit in excess of $50,000, or to ensure that any customer deposit in excess of
$50,000, in each case applying the rules set forth in Annex I for account aggregation and currency
translation, is refunded to the customer within 60 days. For this purpose, a customer deposit does not
refer to credit balances to the extent of disputed charges but does include credit balances resulting from
merchandise returns.
IV. Investment Entities that Qualify as Deemed-Compliant FFIs and Other Special Rules. The Financial
Institutions described in paragraphs A through E of this section are Non-Reporting Indian Financial Institutions
that shall be treated as deemed-compliant FFIs for purposes of section 1471 of the U.S. Internal Revenue Code. In
addition, paragraph F of this section provides special rules applicable to an Investment Entity.
A. Trustee-Documented Trust. A trust established under the laws of India to the extent that the trustee of the
trust is a Reporting U.S. Financial Institution, Reporting Model 1 FFI, or Participating FFI and reports all
information required to be reported pursuant to the Agreement with respect to all U.S. Reportable Accounts of
the trust.
B. Sponsored Investment Entity and Controlled Foreign Corporation. A Financial Institution described in
subparagraph B(1) or B(2) of this section having a sponsoring entity that complies with the requirements of
subparagraph B(3) of this section.
1. A Financial Institution is a sponsored investment entity if (a) it is an Investment Entity established in
India that is not a qualified intermediary, withholding foreign partnership, or withholding foreign trust
pursuant to relevant U.S. Treasury Regulations; and (b) an Entity has agreed with the Financial Institution
to act as a sponsoring entity for the Financial Institution.
2. A Financial Institution is a sponsored controlled foreign corporation if (a) the Financial Institution is a
controlled foreign corporation1 organized under the laws of India that is not a qualified intermediary,
withholding foreign partnership, or withholding foreign trust pursuant to relevant U.S. Treasury
Regulations; (b) the Financial Institution is wholly owned, directly or indirectly, by a Reporting U.S.
Financial Institution that agrees to act, or requires an affiliate of the Financial Institution to act, as a
sponsoring entity for the Financial Institution; and (c) the Financial Institution shares a common
electronic account system with the sponsoring entity that enables the sponsoring entity to identify all
Account Holders and payees of the Financial Institution and to access all account and customer
information maintained by the Financial Institution including, but not limited to, customer identification
information, customer documentation, account balance, and all payments made to the Account Holder or
payee.
3. The sponsoring entity complies with the following requirements:
a) The sponsoring entity is authorized to act on behalf of the Financial Institution (such as a fund
manager, trustee, corporate director, or managing partner) to fulfill applicable registration
requirements on the IRS FATCA registration website;
1
A "controlled foreign corporation" means any foreign corporation if more than 50 percent of the total combined
voting power of all classes of stock of such corporation entitled to vote, or the total value of the stock of such
corporation, is owned, or is considered as owned, by "United States shareholders" on any day during the taxable year
of such foreign corporation. The term a "United States shareholder" means, with respect to any foreign corporation,
a United States person who owns, or is considered as owning, 10 percent or more of the total combined voting power
of all classes of stock entitled to vote of such foreign corporation.
66 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
b) The sponsoring entity has registered as a sponsoring entity with the IRS on the IRS FATCA
registration website;
c) If the sponsoring entity identifies any U.S. Reportable Accounts with respect to the Financial
Institution, the sponsoring entity registers the Financial Institution pursuant to applicable registration
requirements on the IRS FATCA registration website on or before the later of December 31, 2015 and
the date that is 90 days after such a U.S. Reportable Account is first identified;
d) The sponsoring entity agrees to perform, on behalf of the Financial Institution, all due diligence,
withholding, reporting, and other requirements that the Financial Institution would have been
required to perform if it were a Reporting Indian Financial Institution;
e) The sponsoring entity identifies the Financial Institution and includes the identifying number of the
Financial Institution (obtained by following applicable registration requirements on the IRS FATCA
registration website) in all reporting completed on the Financial Institution's behalf; and
f) The sponsoring entity has not had its status as a sponsor revoked.
C. Sponsored, Closely Held Investment Vehicle. An Indian Financial Institution satisfying the following
requirements:
1. The Financial Institution is a Financial Institution solely because it is an Investment Entity and is not a qualified
intermediary, withholding foreign partnership, or withholding foreign trust pursuant to relevant U.S. Treasury
Regulations;
2. The sponsoring entity is a Reporting U.S. Financial Institution, Reporting Model 1 FFI, or Participating FFI, is
authorized to act on behalf of the Financial Institution (such as a professional manager, trustee, or managing
partner), and agrees to perform, on behalf of the Financial Institution, all due diligence, withholding, reporting, and
other requirements that the Financial Institution would have been required to perform if it were a Reporting Indian
Financial Institution;
3. The Financial Institution does not hold itself out as an investment vehicle for unrelated parties;
4. Twenty or fewer individuals own all of the debt interests and Equity Interests in the Financial Institution
(disregarding debt interests owned by Participating FFIs and deemed-compliant FFIs and Equity Interests owned
by an Entity if that Entity owns 100 percent of the Equity Interests in the Financial Institution and is itself a
sponsored Financial Institution described in this paragraph C); and
5. The sponsoring entity complies with the following requirements:
a) The sponsoring entity has registered as a sponsoring entity with the IRS on the IRS FATCA registration website;
b) The sponsoring entity agrees to perform, on behalf of the Financial Institution, all due diligence, withholding,
reporting, and other requirements that the Financial Institution would have been required to perform if it were a
Reporting Indian Financial Institution and retains documentation collected with respect to the Financial Institution
for a period of six years;
c) The sponsoring entity identifies the Financial Institution in all reporting completed on the Financial Institution's
behalf; and
d) The sponsoring entity has not had its status as a sponsor revoked.
D. Investment Advisors and Investment Managers and Stock Brokers/Trading Members of Recognized Stock
Exchanges. An Investment Entity established in India that is a Financial Institution solely because it (1) renders
investment advice to, and acts on behalf of, or (2) manages portfolios for, and acts on behalf of, or (3) executes
trades on behalf of a customer for the purposes of investing, managing, or administering funds or securities
deposited in the name of the customer with a Financial Institution other than a Nonparticipating Financial
Institution.
E. Collective Investment Vehicle. An Investment Entity established in India that is regulated as a collective
investment vehicle, provided that all of the interests in the collective investment vehicle (including debt interests in
excess of $50,000) are held by or through one or more exempt beneficial owners, Active NFFEs described in
subparagraph B(4) of section VI of Annex I, U.S. Persons that are not Specified U.S. Persons, or Financial
Institutions that are not Nonparticipating Financial Institutions.
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 67
F. Special Rules. The following rules apply to an Investment Entity:
1. With respect to interests in an Investment Entity that is a collective investment vehicle described in
paragraph E of this section, the reporting obligations of any Investment Entity (other than a Financial
Institution through which interests in the collective investment vehicle are held) shall be deemed fulfilled.
2. With respect to interests in:
a) An Investment Entity established in a Partner Jurisdiction that is regulated as a collective investment
vehicle, all of the interests in which (including debt interests in excess of $50,000) are held by or
through one or more exempt beneficial owners, Active NFFEs described in subparagraph B(4) of
section VI of Annex I, U.S. Persons that are not Specified U.S. Persons, or Financial Institutions that
are not Nonparticipating Financial Institutions; or
b) An Investment Entity that is a qualified collective investment vehicle under relevant U.S. Treasury
Regulations;
the reporting obligations of any Investment Entity that is an Indian Financial Institution (other than a
Financial Institution through which interests in the collective investment vehicle are held) shall be deemed
fulfilled.
3. With respect to interests in an Investment Entity established in India that is not described in paragraph E
or subparagraph F(2) of this section, consistent with paragraph 3 of Article 5 of the Agreement, the
reporting obligations of all other Investment Entities with respect to such interests shall be deemed
fulfilled if the information required to be reported by the first-mentioned Investment Entity pursuant to
the Agreement with respect to such interests is reported by such Investment Entity or another person.
V. Accounts Excluded from Financial Accounts. The following accounts are excluded from the definition of
Financial Accounts and therefore shall not be treated as U.S. Reportable Accounts.
A. Certain Savings Accounts.
1. Retirement and Pension Account. A retirement or pension account maintained in India that satisfies the
following requirements under the laws of India.
a) The account is subject to regulation as a personal retirement account or is part of a registered or
regulated retirement or pension plan for the provision of retirement or pension benefits (including
disability or death benefits);
b) The account is tax-favored (i.e., contributions to the account that would otherwise be subject to tax
under the laws of India are deductible or excluded from the gross income of the account holder or
taxed at a reduced rate, or taxation of investment income from the account is deferred or taxed at a
reduced rate);
c) Annual information reporting is required to the tax authorities in India with respect to the account;
d) Withdrawals are conditioned on reaching a specified retirement age, disability, or death, or penalties
apply to withdrawals made before such specified events; and
e) Either (i) annual contributions are limited to $50,000 or less, or (ii) there is a maximum lifetime
contribution limit to the account of $1,000,000 or less, in each case applying the rules set forth in
Annex I for account aggregation and currency translation.
2. Non-Retirement Savings Accounts.
a) An account maintained in India (other than an insurance or Annuity Contract) that satisfies the
following requirements under the laws of India.
i. The account is subject to regulation as a savings vehicle for purposes other than for retirement;
ii. The account is tax-favored (i.e., contributions to the account that would otherwise be subject to
tax under the laws of India are deductible or excluded from the gross income of the account
holder or taxed at a reduced rate, or taxation of investment income from the account is deferred
or taxed at a reduced rate);
68 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
iii. Withdrawals are conditioned on meeting specific criteria related to the purpose of the savings
account (for example, the provision of educational or medical benefits), or penalties apply to
withdrawals made before such criteria are met; and
iv. Annual contributions are limited to $50,000 or less, applying the rules set forth in Annex I for
account aggregation and currency translation.
b) An account established in India under the Senior Citizens Saving Scheme of 2004 to provide Indian
senior citizens saving schemes and savings and deposits account.
B. Certain Term Life Insurance Contracts. A life insurance contract maintained in India with a coverage
period that will end before the insured individual attains age 90, provided that the contract satisfies the
following requirements:
1. Periodic premiums, which do not decrease over time, are payable at least annually during the period the
contract is in existence or until the insured attains age 90, whichever is shorter;
2. The contract has no contract value that any person can access (by withdrawal, loan, or otherwise) without
terminating the contract;
3. The amount (other than a death benefit) payable upon cancellation or termination of the contract cannot
exceed the aggregate premiums paid for the contract, less the sum of mortality, morbidity, and expense
charges (whether or not actually imposed) for the period or periods of the contract's existence and any
amounts paid prior to the cancellation or termination of the contract; and
4. The contract is not held by a transferee for value.
C. Account Held By an Estate. An account maintained in India that is held solely by an estate if the
documentation for such account includes a copy of the deceased's will or death certificate.
D. Escrow Accounts. An account maintained in India established in connection with any of the following:
1. A court order or judgment.
2. A sale, exchange, or lease of real or personal property, provided that the account satisfies the following
requirements:
a) The account is funded solely with a down payment, earnest money, deposit in an amount appropriate
to secure an obligation directly related to the transaction, or a similar payment, or is funded with a
financial asset that is deposited in the account in connection with the sale, exchange, or lease of the
property;
b) The account is established and used solely to secure the obligation of the purchaser to pay the
purchase price for the property, the seller to pay any contingent liability, or the lessor or lessee to pay
for any damages relating to the leased property as agreed under the lease;
c) The assets of the account, including the income earned thereon, will be paid or otherwise distributed
for the benefit of the purchaser, seller, lessor, or lessee (including to satisfy such person's obligation)
when the property is sold, exchanged, or surrendered, or the lease terminates;
d) The account is not a margin or similar account established in connection with a sale or exchange of a
financial asset; and
e) The account is not associated with a credit card account.
3. An obligation of a Financial Institution servicing a loan secured by real property to set aside a portion of a
payment solely to facilitate the payment of taxes or insurance related to the real property at a later time.
4. An obligation of a Financial Institution solely to facilitate the payment of taxes at a later time.
E. Partner Jurisdiction Accounts. An account maintained in India and excluded from the definition of
Financial Account under an agreement between the United States and another Partner Jurisdiction to facilitate
the implementation of FATCA, provided that such account is subject to the same requirements and oversight
under the laws of such other Partner Jurisdiction as if such account were established in that Partner
Jurisdiction and maintained by a Partner Jurisdiction Financial Institution in that Partner Jurisdiction.
VI. Definitions. The following additional definitions shall apply to the descriptions above:
A. Reporting Model 1 FFI. The term Reporting Model 1 FFI means a Financial Institution with respect to
which a non-U.S. government or agency thereof agrees to obtain and exchange information pursuant to a
Model 1 IGA, other than a Financial Institution treated as a Nonparticipating Financial Institution under the
Model 1 IGA. For purposes of this definition, the term Model 1 IGA means an arrangement between the
United States or the Treasury Department and a non-U.S. government or one or more agencies thereof to
¹Hkkx IIµ[k.M 3(ii)º Hkkjr dk jkti=k % vlk/kj.k 69
implement FATCA through reporting by Financial Institutions to such non-U.S. government or agency thereof,
followed by automatic exchange of such reported information with the IRS.
B. Participating FFI. The term Participating FFI means a Financial Institution that has agreed to comply with
the requirements of an FFI Agreement, including a Financial Institution described in a Model 2 IGA that has
agreed to comply with the requirements of an FFI Agreement. The term Participating FFI also includes a
qualified intermediary branch of a Reporting U.S. Financial Institution, unless such branch is a Reporting
Model 1 FFI. For purposes of this definition, the term FFI Agreement means an agreement that sets forth the
requirements for a Financial Institution to be treated as complying with the requirements of section 1471(b) of
the U.S. Internal Revenue Code. In addition, for purposes of this definition, the term Model 2 IGA means an
arrangement between the United States or the Treasury Department and a non-U.S. government or one or more
agencies thereof to facilitate the implementation of FATCA through reporting by Financial Institutions directly
to the IRS in accordance with the requirements of an FFI Agreement, supplemented by the exchange of
information between such non-U.S. government or agency thereof and the IRS.
MEMORANDUM OF UNDERSTANDING REGARDING THE AGREEMENT BETWEEN THE
GOVERNMENT OF THE REPUBLIC OF INDIA AND THE GOVERNMENT OF THE UNITED STATES OF
AMERICA TO IMPROVE INTERNATIONAL TAX COMPLIANCE AND TO IMPLEMENT FATCA
At the signing today of the Agreement Between the Government of the Republic of India and the Government of the
United States of America to Improve International Tax Compliance and to Implement FATCA (hereinafter the
"Agreement"), the representatives of the Republic of India and the United States of America wish to confirm their
understanding of the following:
In reference to paragraph 1 of Article 10 (Term of Agreement), the Government of the United States of America
understands that the Government of the Republic of India plans to propose implementing legislation and formulation of
relevant regulations in 2015 with the goal of having the Agreement enter into force by September 30, 2015. Based on
this understanding, as of the date of signature of the Agreement, the United States Department of the Treasury intends
to continue to treat each Indian Financial Institution, as that term is defined in the Agreement, as complying with, and
not subject to withholding under section 1471 of the U.S. Internal Revenue Code during such time as India is pursuing
the necessary internal procedures for entry into force of the Agreement. The United States further understands that
India's Ministry of Finance intends to contact the United States Department of the Treasury as soon as it is aware that
there might be a delay such that India would not be able to provide its notification under paragraph 1 of Article 10 of
the Agreement prior to September 30, 2015.
In reference to subparagraphs 1(y) and 1(z) of the Agreement (definitions of Cash Value and Cash Value Insurance
Contract), it is understood that a single premium life insurance contract that does not permit an amount to be paid on
surrender or termination of the contract and that does not allow amounts to be borrowed under or with regard to the
contract, does not constitute a Cash Value Insurance Contract, as such term is used in the Agreement.
In reference to I.C of Annex II of the Agreement (Central Bank), it is understood that the Reserve Bank of India is the
Central Bank for purposes of the Agreement.
In reference to I.A of Annex II of the Agreement (Governmental Entity), it is understood that the subsidiaries/associates
of the Reserve Bank of India are controlled entities that are governmental entities provided that:
a) The subsidiary/associate is wholly owned and controlled by one or more Indian Governmental Entities
(including the Reserve Bank of India) directly or through one or more controlled entities;
b) The Entity's net earnings are credited to its own account or to the accounts of one or more Indian
Governmental Entities, with no portion of its income inuring to the benefit of any private person; and
c) The Entity's assets vest in one or more Indian Governmental Entities upon dissolution.
In reference to VI.B.4(j) of Annex I, it is understood that an Investor Protection Fund, as referred to in Section 10,
clause 23EA of the Indian Income-tax Act 1961, a Credit Guarantee Fund Trust for Small Industries as referred to in
Section 10, clause 23EB of the Indian Income-tax Act 1961 and an Investor Protection Fund, as referred to in Section
10, clause 23EC of the Indian Income-tax Act 1961 meet the established and operated clause in VI.B.4(j)(i) of Annex I
and are treated as an Active NFFE for purposes of the Agreement if VI.B.4(j)(ii) through (v) are also satisfied.
70 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II--SEC. 3(ii)]
In reference to III.B of Annex II, it is understood that (i) Regional Rural Banks constituted under the Regional Rural
Bank Act 1976 (no. 21 of 1976), (ii) Urban Cooperative Banks constituted under respective State Cooperative Societies
Act or Multi State Cooperative Societies Act, (iii) State Cooperative Banks/District Central Cooperative Banks
constituted under respective State Cooperative Societies Act and (iv) Local Area Banks licensed under the Banking
Regulations Act, 1949 and regulated and registered as public limited companies under the Companies Act, 1956 or
Companies Act, 2013 are treated as Local Banks within the meaning of the Agreement provided that the asset test in
paragraph 4 of III.B of Annex II is met.
In reference to subparagraph 2(b) of Article 2 of the Agreement, it is understood that due diligence procedures, that are
broadly similar to the new account procedures in Annex I of the Agreement, are already in effect under the domestic
law of the United States, to the extent necessary for the provision of information by Reporting U.S. Financial
Institutions under this Agreement.
Signed at the Government of the Republic of India Ministry of Finance, North Block, New Delhi, India, in duplicate, in
the Hindi and English languages, this 9th day of July, 2015.
FOR THE GOVERNMENT OF THE FOR THE GOVERNMENT OF THE
REPUBLIC OF INDIA: UNITED STATES OF AMERICA:
Shaktikanta Das Richard R Verma
Revenue Secretary Ambassador
Printed by the Manager, Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.
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