CBDT forms data security panel before FATCA deal with US
May, 05th 2015
Central Board of Direct Taxes (CBDT) has constituted a high- level committee to secure confidential tax data, obtained under mutual exchange with US authorities, as part of India's compliance measures for signing the much awaited Foreign Account Tax Compliance Act (FATCA).
The seven-member panel will be headed by the Member (Income Tax) of CBDT who is of the rank of a special secretary in the finance ministry.
Other members include two Joint Secretary-rank officers handling sensitive foreign exchange tax information and policy matters and four Commissioners of Income Tax (I-T) dealing in investigation and intelligence subjects of the I-T department.
"The panel, called Information Security Committee, is part of necessary compliance norms required to be in place mandatorily before India signs the FATCA in a full-fledged manner with the US," a senior official told PTI.
"The ambitious agreement between the two countries is very important and the most important tool to combat black money cases," he said.
Under FATCA, US government has Inter-governmental Agreement for sharing of information with various countries where American individuals and companies have accounts and other assets.
Under the pact, the exchange of information between the countries will be subject to a confidentiality clause.
Also, overseas financial institutions need to provide details about accounts held by Americans or foreign entities where the US taxpayers hold a substantial ownership interest, as also about all major transactions.
If a financial institution does not comply to FATCA, it would have to pay 30 per cent penalty tax on all its US revenues, including dividend, interest, fees and sales.
The committee, according to the Terms of Reference (ToR) issued by the CBDT, will "ratify information, security policies and procedures" with regard to the dealing of a tax case in the I-T department and CBDT.
"Once an information is shared under FATCA about an entity, its confidentiality is the most important virtue as the data obtained under exchange will travel under different verticals in the board and the department.
The Committee, will hence ensure that accountability and responsibilities are fixed at each stage of a case under exchange or probe and see that no breach occurs while handling of this secret data," sources said.
CBDT, the apex policy making body of the Income Tax department, by way of ISC has also brought together all its business and e-data heads on one platform for seamless and sabotage-proof information ranging from the PAN database to the Income Tax Returns of an entity whose case is exchanged under FATCA. MORE PTI NES
The ToR said the committee will also initiate internal and external security reviews and ensure that action is taken to rectify any identified shortfalls and in case of "breach of set protocols" it will take disciplinary action against the guilty.
The ISC will also have a Chief Information Security Officer (CSIO) whose main role will be to "ensure that responsibilities are defined for and that procedures are in effect to promptly detect, investigate, report and resolve security incidents" among other tasks related to coordination of the panel.
Revenue Secretary Shaktikanta Das had said recently that India will soon sign the FATCA and operationalise it fully.
"It (FATCA) will get signed very shortly. There are certain procedural steps and formalities to be gone through.
We have already got the approval of the government and it is just certain procedural steps which are getting completed and it will be signed very shortly," Das had said.
The procedural steps, said sources, are the ones like forming an ISC before India gets on-board the FATCA regime which US has inked with various other countries to combat black money and tax evasion instances across the globe in coordination with partner nations.
India will both obtain and provide information in case of tax matters under this agreement with the US.