Closure of financial accounts under Rule 114H (8) of the Income-Tax Rules, 1962 under alternative procedure of FATCA
Stakeholders have highlighted several difficulties in following the provision for “closure” of financial accounts. In view of the same, India and the United States are discussing the alternative procedures under paragraph G of Section VI of Annex I with a view towards adjusting them to permit a few month extension of time for completing the due diligence and not requiring account closure within one year of entry into force of the agreement (i.e., August 31, 2016).
For providing immediate relief to the account holders and in wider public interest, it has been decided that, the financial institutions may not close the accounts by 31st August 2016 in respect of which self-certifications have not been obtained under the alternative procedure. The revised timelines for completing due diligence in respect of such accounts shall be notified in due course. In the interim, the financial institutions should continue to work on completing the required due diligence, including obtaining self-certifications.