TMI BlogThe following Entities shall be treated as exempt beneficial owners or deemed-compliant FFIsX X X X Extracts X X X X X X X X Extracts X X X X ..... may be included in the mutual agreement or arrangement described in paragraph 6 of Article 3 of the Agreement. I. Exempt Beneficial Owners other than Funds. The following Entities shall be treated as Non-Reporting Indian Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code, other than with respect to a payment that is derived from an obligation held in connection with a commercial financial activity of a type engaged in by a Specified Insurance Company, Custodial Institution, or Depository Institution. A. Governmental Entity. The government of India, any political subdivision of India (which, for the avoidance of doubt, includes a state, province, county, or municipality), or any wholly owned agency or instrumentality of India, board, corporation, authority or any other body established or constituted under an act of the Government of India or of its political subdivisions or any one or more of the foregoing (each, an Indian Governmental Entity ). This category is comprised of the integral parts, controlled entities, and political subdivisions of India. 1. An integral part of India means an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India. II. Funds that Qualify as Exempt Beneficial Owners. The following Entities shall be treated as Non-Reporting Indian Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code. A. Treaty-Qualified Retirement Fund . A fund established in India, provided that the fund is entitled to benefits under an income tax treaty between India and the United States on income that it derives from sources within the United States (or would be entitled to such benefits if it derived any such income) as a resident of India that satisfies any applicable limitation on benefits requirement, and is operated principally to administer or provide pension or retirement benefits. B. Broad Participation Retirement Fund. A fund established in India to provide retirement, disability, or death benefits, or any combination thereof, to beneficiaries that are current or former employees (or persons designated by such employees) of one or more employers in consideration for services rendered, provided that the fund: 1. Does not have a single beneficiary with a right to more than five percent of the fund s assets; 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion reporting about its beneficiaries to the relevant tax authorities in India. D. Pension Fund of an Exempt Beneficial Owner. A fund established in India by an exempt beneficial owner to provide retirement, disability, or death benefits to beneficiaries or participants that are current or former employees of the exempt beneficial owner (or persons designated by such employees), or that are not current or former employees, if the benefits provided to such beneficiaries or participants are in consideration of personal services performed for the exempt beneficial owner. E. Investment Entity Wholly Owned by Exempt Beneficial Owners . An Entity that is an Indian Financial Institution solely because it is an Investment Entity, provided that each direct holder of an Equity Interest in the Entity is an exempt beneficial owner, and each direct holder of a debt interest in such Entity is either a Depository Institution (with respect to a loan made to such Entity) or an exempt beneficial owner. F. Regimental Fund or Non-public Fund of the Armed Forces. A fund established in India as a regimental fund or non-public fund by the armed forces of the Union of India for the we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Institution performs solely administrative support functions; 3. The Financial Institution must not solicit customers or Account Holders outside India. For this purpose, a Financial Institution shall not be considered to have solicited customers or Account Holders outside India merely because the Financial Institution (a) operates a website, provided that the website does not specifically indicate that the Financial Institution provides Financial Accounts or services to nonresidents, and does not otherwise target or solicit U.S. customers or Account Holders, or (b) advertises in print media or on a radio or television station that is distributed or aired primarily within India but is also incidentally distributed or aired in other countries, provided that the advertisement does not specifically indicate that the Financial Institution provides Financial Accounts or services to nonresidents, and does not otherwise target or solicit U.S. customers or Account Holders; 4. The Financial Institution must be required under the laws of India to identify resident Account Holders for purposes of either information reporting or withholding of tax with respect to Financial Accounts held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on II of this Annex II, satisfy the requirements set forth in this paragraph A; and 10. The Financial Institution must not have policies or practices that discriminate against opening or maintaining Financial Accounts for individuals who are Specified U.S. Persons and residents of India. B. Local Bank. A Financial Institution satisfying the following requirements: 1. The Financial Institution operates solely as (and is licensed and regulated under the laws of India as) (a) a bank or (b) a credit union or similar cooperative credit organization that is operated without profit; 2. The Financial Institution s business consists primarily of receiving deposits from and making loans to, with respect to a bank, unrelated retail customers and, with respect to a credit union or similar cooperative credit organization, members, provided that no member has a greater than five percent interest in such credit union or cooperative credit organization; 3. The Financial Institution satisfies the requirements set forth in subparagraphs A(2) and A(3) of this section, provided that, in addition to the limitations on the website described in subparagraph A(3) of this section, the we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvestment Entities that Qualify as Deemed-Compliant FFIs and Other Special Rules. The Financial Institutions described in paragraphs A through E of this section are Non-Reporting Indian Financial Institutions that shall be treated as deemed-compliant FFIs for purposes of section 1471 of the U.S. Internal Revenue Code. In addition, paragraph F of this section provides special rules applicable to an Investment Entity. A. Trustee-Documented Trust. A trust established under the laws of India to the extent that the trustee of the trust is a Reporting U.S. Financial Institution, Reporting Model 1 FFI, or Participating FFI and reports all information required to be reported pursuant to the Agreement with respect to all U.S. Reportable Accounts of the trust. B. Sponsored Investment Entity and Controlled Foreign Corporation. A Financial Institution described in subparagraph B(1) or B(2) of this section having a sponsoring entity that complies with the requirements of subparagraph B(3) of this section. 1. A Financial Institution is a sponsored investment entity if (a) it is an Investment Entity established in India that is not a qualified intermediary, withholding foreign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccounts with respect to the Financial Institution, the sponsoring entity registers the Financial Institution pursuant to applicable registration requirements on the IRS FATCA registration website on or before the later of December 31, 2015 and the date that is 90 days after such a U.S. Reportable Account is first identified; d) 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; e) The sponsoring entity identifies the Financial Institution and includes the identifying number of the Financial Institution (obtained by following applicable registration requirements on the IRS FATCA registration website) in all reporting completed on the Financial Institution s behalf; and f) The sponsoring entity has not had its status as a sponsor revoked. C. Sponsored, Closely Held Investment Vehicle. An Indian Financial Institution satisfying the following requirements: 1. The Financial Institution is a Financial Institution solely because it is an Investment Entity an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er with a Financial Institution other than a Nonparticipating Financial Institution. E. Collective Investment Vehicle . An Investment Entity established in India that is regulated as a collective investment vehicle, provided that all of the interests in the collective investment vehicle (including debt interests in excess of $50,000) are held by or through one or more exempt beneficial owners, Active NFFEs described in subparagraph B(4) of section VI of Annex I, U.S. Persons that are not Specified U.S. Persons, or Financial Institutions that are not Nonparticipating Financial Institutions. F. Special Rules. The following rules apply to an Investment Entity: 1. With respect to interests in an Investment Entity that is a collective investment vehicle described in paragraph E of this section, the reporting obligations of any Investment Entity (other than a Financial Institution through which interests in the collective investment vehicle are held) shall be deemed fulfilled. 2. With respect to interests in: a) An Investment Entity established in a Partner Jurisdiction that is regulated as a collective investment vehicle, all of the interests in which (including de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e) Either (i) annual contributions are limited to $50,000 or less, or (ii) there is a maximum lifetime contribution limit to the account of $1,000,000 or less, in each case applying the rules set forth in Annex I for account aggregation and currency translation. 2. Non-Retirement Savings Accounts. a) An account maintained in India (other than an insurance or Annuity Contract) that satisfies the following requirements under the laws of India. i. The account is subject to regulation as a savings vehicle for purposes other than for retirement; ii. 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); iii. Withdrawals are conditioned on meeting specific criteria related to the purpose of the savings account (for example, the provision of educational or medical benefits), or penalties apply to withdrawals made before such criteria are met; and iv. Annual contributions are limited to $50,000 or less, applyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e income earned thereon, will be paid or otherwise distributed for the benefit of the purchaser, seller, lessor, or lessee (including to satisfy such person s obligation) when the property is sold, exchanged, or surrendered, or the lease terminates; d) The account is not a margin or similar account established in connection with a sale or exchange of a financial asset; and e) The account is not associated with a credit card account. 3. An obligation of a Financial Institution servicing a loan secured by real property to set aside a portion of a payment solely to facilitate the payment of taxes or insurance related to the real property at a later time. 4. An obligation of a Financial Institution solely to facilitate the payment of taxes at a later time. E. Partner Jurisdiction Accounts. An account maintained in India and excluded from the definition of Financial Account under an agreement between the United States and another Partner Jurisdiction to facilitate the implementation of FATCA, provided that such account is subject to the same requirements and oversight under the laws of such other Partner Jurisdiction as if such account were established in that Partner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he United States of America to Improve International Tax Compliance and to Implement FATCA (hereinafter the Agreement ), the representatives of the Republic of India and the United States of America wish to confirm their understanding of the following: In reference to paragraph 1 of Article 10 (Term of Agreement) , the Government of the United States of America understands that the Government of the Republic of India plans to propose implementing legislation and formulation of relevant regulations in 2015 with the goal of having the Agreement enter into force by September 30, 2015. Based on this understanding, as of the date of signature of the Agreement, the United States Department of the Treasury intends to continue to treat each Indian Financial Institution, as that term is defined in the Agreement, as complying with, and not subject to withholding under section 1471 of the U.S. Internal Revenue Code during such time as India is pursuing the necessary internal procedures for entry into force of the Agreement. The United States further understands that India s Ministry of Finance intends to contact the United States Department of the Treasury as soon as it is aware that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erative Banks/District Central Cooperative Banks constituted under respective State Cooperative Societies Act and (iv) Local Area Banks licensed under the Banking Regulations Act, 1949 and regulated and registered as public limited companies under the Companies Act, 1956 or Companies Act, 2013 are treated as Local Banks within the meaning of the Agreement provided that the asset test in paragraph 4 of III.B of Annex II is met. In reference to subparagraph 2(b) of Article 2 of the Agreement , it is understood that due diligence procedures, that are broadly similar to the new account procedures in Annex I of the Agreement, are already in effect under the domestic law of the United States, to the extent necessary for the provision of information by Reporting U.S. Financial Institutions under this Agreement. Signed at the Government of the Republic of India Ministry of Finance, North Block, New Delhi, India, in duplicate, in the Hindi and English languages, this 9th day of July, 2015. FOR THE GOVERNMENT OF THE REPUBLIC OF INDIA: FOR THE GOVERNMENT OF THE UNITED STATES OF AMERICA: (Shaktikanta Das) Revenue Secreta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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