In 2016, the tax department had indefinitely extended the deadline for complying with self-certification norms. Photograph: (AFP)
Financial institutions have to obtain self-certification for all individual and entity accounts opened between 2014 and 2015
Accounts of individuals and entities in India opened between July 1, 2014 to August 31, 2016 will have to be self certified by the account holders or face closure by April 30, the country's Central Board of Direct Taxes said in a statement Wednesday.
The tax department has asked financial institutions to obtain self-certification from account holders in order to comply with the Foreign Accounts Tax Compliance Act (FATCA) provision and avoid the blocking of accounts.
The FATCA allows automatic exchange of financial information between India and the US.
Under the FATCA provisions, financial institutions are required to obtain self-certification and documentation or else they were required to close the accounts and report the ones found to be "reportable accounts" as per the prescribed due diligence procedure for a pre-existing account.
"The account holders may be informed that, in case self-certifications are not provided till April 30, 2017, the accounts would be blocked, which would mean that the financial institution would prohibit the account holder from effecting any transaction with respect to such accounts," the Central Board of Direct Taxes (CBDT) said in a statement.
The CBDT also advised all financial institutions that all efforts should be made by them to obtain self-certification.
India had entered into an agreement with the US for the implementation of the Foreign Accounts Tax Compliance Act with effect from August 31, 2015.
Under the Income Tax rules, the financial institutions had to obtain self-certification from account holders by August 31, 2016, for all individual and entity accounts opened from July 1, 2014 to August 31, 2015.
However, in view of difficulties faced by stakeholders, the tax department indefinitely extended the deadline for complying with self-certification norms on August 31 last year.
The CBDT said in today's statement that it had received queries from financial institutions regarding the revised time lines for completion of due diligence.
It said if the account is blocked due to lack of self-certification, then the transactions by the account holder in such blocked accounts will be permitted once the self-certification is obtained and due diligence is completed.
(WION with inputs from PTI)