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:
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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.
