9911796707
TMI BlogAgreement 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 taxesX X X X Extracts X X X X X X X X Extracts X X X X ..... (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 Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eans (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. 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 Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oes 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 po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d; 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 reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement; 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 pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial 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: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... OLLABORATION 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 dil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t such account with respect to 2014, but must report information about the account on an annual basis thereafter. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection, 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 certifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequent 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 Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ernment (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 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 informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pating 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he laws of India due to its status as a retirement or pension plan; 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, disabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 excee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rocedures, 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 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 In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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; b) The sponsoring entity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 beha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quirements 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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