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TMI BlogIncome–tax (11th Amendment) Rules, 2015X X X X Extracts X X X X X X X X Extracts X X X X ..... means an account (other than an excluded account) maintained by a financial institution, and includes- (i) a depository account; (ii) a custodial account; (iii) in the case of an investment entity, any equity or debt interest in the financial institution. Explanation.- For the purposes of this sub-clause "financial account" shall not include any equity interest or debt interest in an entity that is an investment entity solely because it,- (a) renders investment advice to, and acts on behalf of; or (b) manages portfolios for, and acts on behalf of, a customer for the purpose of investing, managing, or administering financial assets deposited in the name of the customer with a financial institution that is not a non-participating financial institution other than such entity; (iv) in the case of a financial institution not described in sub-clause (iii), any equity or debt interest in the financial institution, if the class of interests was established with a purpose of avoiding reporting in accordance with rule 114G and, in case of a U.S. reportable account, if the value of debt or equity interest is determined, directly indirectly, primarily by reference to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtable account such value is greater than an amount equivalent to fifty thousand U.S. dollars. Explanation.- For the purposes of this clause, a single premium life insurance contract which does not permit an amount to be paid on surrender or termination of the contract and which does not allow amounts to be borrowed under or with regard to the contract, shall not constitute a cash value insurance contract; (g) "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, but does not include an amount payable under an insurance contract,- (A) solely by reason of the death of an individual insured under a life insurance contract including a refund of a previously paid premium provided such refund is a limited risk refund; or (B) as a personal injury or sickness benefit or other benefit providing indemnification of an economic loss incurred upon the occurrence of the event insured against; or (C) as a refund of a previously p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents of item (E) will not fail to satisfy such requirements solely because such financial account may receive assets or funds transferred from one or more financial accounts that meet the requirements of item (A) or (B) or from one or more retirement or pension funds that meets with the requirements of clauses (e), (f) or (g) of Explanation to clause (1); (ii) an account that satisfies the following requirements, namely:- (A) the account is subject to regulation as a savings vehicle for purposes other than for retirement, or the account (other than U.S. reportable account) is subject to regulation as an investment vehicle for purposes other than for retirement and is regularly traded on an established securities market; (B) the account is tax-favoured where contributions to the account that will otherwise be subject to tax are deductible or excluded from the total 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) withdrawals are conditioned on meeting specific criteria related to the purpose of the investment or savings account (for example, the provision of educational or m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 under the lease; (c) the assets of the account, including the 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 depository account referred to in sub-clause (vii); (C) 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 insu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and where its income attributable to the holding of financial assets and related financial services equals or exceeds twenty per cent. of its gross income during the three financial years preceding the year in which determination is made or the period during which the entity has been in existence, whichever is less; (b) "depository institution" means any entity that accepts deposits in the ordinary course of a banking or similar business; (c) "investment entity" means any entity,- (A) that primarily conducts as a business one or more of the following activities or operations for or on behalf of a customer, namely:- (i) 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; or (ii) individual and collective portfolio management; or (iii) otherwise investing, administering, or managing financial assets or money on behalf of other persons; or (B) the gross income of which is primarily attributable to investing, reinvesting, or trading in financial assets, if the entity is managed by anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting financial institution" means any financial institution that is,- (a) a Governmental entity, International Organisation or Central Bank, 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; (b) a Treaty Qualified Retirement Fund; a Broad Participation Retirement Fund; a Narrow Participation Retirement Fund; or a Pension Fund of a Governmental entity, International Organization or Central Bank; (c) a non-public fund of the armed forces, Employees' State Insurance Fund, a gratuity fund or a provident fund; (d) an entity that is an Indian financial institution only because it is an investment entity, provided that each direct holder of an equity interest in the entity is a financial institution referred to in sub-clauses (a) to (c), 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 a financial institution referred to in sub-clauses (a) to (c); (e) a qualified credit card issuer; (f) an investmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... neficiaries of a Governmental programme, and the programme activities are performed for the general public with respect to the common welfare or relate to the administration of a Department of Government: Provided also that income is considered to inure to the benefit of private persons if the income is derived from the Governmental entity engaged in a commercial business, such as a commercial banking business, which provides financial services to private persons; (ii) a controlled entity means an entity that is separate in form from the country or territory or that otherwise constitutes a separate juridical entity: Provided that- (a) the entity is wholly owned and controlled by one or more 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 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 Governmental entities upon dissolution: Provided further that the income does not inure to the benefit of private persons if such persons are the intended benef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the following requirements, namely:- (a) the fund is generally exempt from tax on investment income, or taxation of such income is deferred or taxed at a reduced rate, due to its status as a retirement or pension plan; (b) the fund receives at least fifty per cent of its total contributions [other than transfer of assets from other plans referred to in clauses (D) to (G) or from retirement and pension accounts referred to in sub-clause (i) of clause (h) of Explanation to clause (1)] from the sponsoring employers; (c) distributions or withdrawals from the fund are allowed only in the event of retirement, disability or death [except rollover distributions to other retirement funds referred to in clauses (E) to (G), or retirement and pension accounts referred to in sub-clause (i) of clause (h) of Explanation to clause (1)], or penalties which apply to distributions or withdrawals made before such events; or (d) contributions (other than permitted make-up contributions) by employees to the fund are limited by reference to earned income of the employee or may not exceed an amount equivalent to fifty thousand U.S. dollars annually, applying the procedures set forth in clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the payment of a gratuity to certain types of employees of an Indian employer specified in the Payment of Gratuity Act, 1972; (K) "provident fund" means a fund established under the Provident Funds Act, 1925 (19 of 1925) or the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952) to provide current and former employees of Indian employers retirement benefits in consideration for services rendered: Provided that fund,- (i) does not have any beneficiary with a right to more than five per cent. of the fund's assets; (ii) is subject to Government regulation and provides annual information reporting about its beneficiaries to the income- tax authorities; (iii) is generally exempt from tax on investment income due to its status as a provident fund; and (iv) contributions (other than permitted make-up contributions) by employees to the fund are limited by reference to earned income of the employee or may not exceed an amount equivalent to fifty thousand U.S. dollars annually, applying the procedures set forth in clause (c) of sub-rule (7) of rule 114H for account aggregation and currency translation; (L) "qualified credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uot;financial institution with a local client base" means a financial institution satisfying the following requirements, namely:- (i) it has been granted a license and is regulated as a financial institution under any law for the time being in force; (ii) the financial institution does not have a fixed place of business outside India. Explanation.- For the purposes of this sub-clause, a fixed place of business does not include a location that is not advertised to the public and from which the financial institution performs only administrative support functions; and (iii) the financial institution does not solicit customers or account holders outside India. Explanation.- For the purpose of this sub-clause, 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 non-residents, and does not otherwise target or solicit customers or account holders who are resident of any country or territory outside India for tax purposes; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y any reportable account or financial account held by a non-participating financial institution, and shall report such financial account as would be required if the financial institution were a reporting financial institution or close such financial account; (ix) each related entity of the financial institution that is a financial institution must be incorporated or organised in India and, with the exception of any related entity that is a retirement fund referred to in clauses (D) to (G) of this Explanation, satisfies the requirements set forth in this clause; and (x) the financial institution must not have policies or practices which discriminate against opening or maintaining financial accounts for individuals who are specified U.S. persons and residents of India; (O) "local bank" means a financial institution satisfying the following requirements, namely:- (i) the financial institution operates only as (and is licensed and regulated under any law for the time being in force) a bank, or a credit union or similar cooperative credit organisation which is operated without profit; (ii) the business of the financial institution consists primarily of receiving depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applying the procedures prescribed in clause (c) of sub-rule (7) of rule 114H for account aggregation and currency translation; and (iii) the financial institution does not have more than fifty million U.S. dollars in assets on its balance sheet, and the financial institution and any related entities, taken together, do not have more than fifty million U.S. dollars in total assets on their consolidated or combined balance sheets. (Q) "sponsored investment entity and controlled foreign corporation" means a financial institution described in the following sub-clauses, namely:- (i) a financial institution is a sponsored investment entity if- (a) it is an investment entity established in India that is not a qualified intermediary (being an intermediary that is a party to a withholding agreement with the United States of America), withholding foreign partnership, or withholding foreign trust; and (b) an entity has agreed with the financial institution to act as a sponsoring entity for the financial institution; (ii) a financial institution is a sponsored controlled foreign corporation if- (a) the financial institution is a controlled foreign corporation establish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sponsoring entity has not had its status as a sponsor revoked; (R) "sponsored, closely held investment vehicle" means a financial institution satisfying the following requirements, namely:- (i) it is a financial institution only because it is an investment entity and is not a qualified intermediary (being an intermediary that is a party to a withholding agreement with the United States of America), withholding foreign partnership, or withholding foreign trust; (ii) the sponsoring entity is a reporting U.S. financial institution referred to in Article 1 of the FATCA agreement, reporting financial institution, or participating foreign financial institution defined in Annex II of the FATCA agreement, is authorised to act on behalf of the financial institution (such as a professional manager, trustee, or managing partner), and agrees to perform, on behalf of the financial institution, all due diligence, withholding, reporting, and other requirements which the financial institution would have been required to perform if it were a reporting financial institution; (iii) the financial institution does not act as an investment vehicle for unrelated parties; (iv) twen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regularly traded on an established securities market. Explanation.- For the purpose of this sub-clause, an established securities market means an exchange that is recognised and supervised by a Governmental authority in which the securities market is located and that has a meaningful annual value of shares traded on the exchange; (iii) the entity is a Governmental entity, an International Organization, a Central Bank, or an entity wholly owned by one or more of these entities; or (iv) substantially all of the activities of the entity 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: Provided that an entity shall not qualify for this status if it functions 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; or (v) the entity is not yet operating a business and has no prior operating history, but is invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itory of residence or any political sub-division thereof. Explanation.- For the purpose of this sub-clause, the following shall be treated as fulfilling the criteria provided in the said sub-clause, namely:- (I) an Investor Protection Fund referred to in clause (23EA); (II) a Credit Guarantee Fund Trust for Small Industries referred to in clause 23EB; and (III) an Investor Protection Fund referred to in clause (23EC), of section 10 of the Act; (B) "controlling person" means the natural person who exercises control over an entity and includes a beneficial owner as determined under sub-rule (3) of rule 9 of the Prevention of Money-laundering (Maintenance of Records) Rules, 2005. Explanation 1.- In determining the beneficial owner, the procedure specified in the following circular as amended from time to time shall be applied, namely:- (i) DBOD.AML.BC. No.71/14.01.001/2012-13, issued on the 18th January, 2013 by the Reserve Bank of India; or (ii) CIR/MIRSD/2/2013, issued on the 24th January, 2013 by the Securities and Exchange Board of India; or (iii) IRDA/SDD/GDL/CIR/019/02/2013, issued on the 4th February, 2013 by the Insurance Regulatory and Development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, of a financial institution (other than a non-reporting financial institution) which is not resident in India, if that branch is located in India; (8) "reportable person" means,- (a) one or more specified U.S. persons; or (b) one or more persons other than,- (i) a corporation, the stock of which is regularly traded on one or more established securities markets; (ii) any corporation that is a related entity of a corporation mentioned in item (i); (iii) a Governmental entity; (iv) an International organisation; (v) a Central bank; or (vi) a financial institution, that is a resident of any country or territory outside India (except the United States of America) under the tax laws of such country or territory or an estate of a decedent who was a resident of any country or territory outside India (except the United States of America) under the tax laws of such country or territory; (9) "specified U.S. person" means a U.S. Person, other than the persons referred to in sub-clauses (i) to (xiii) of clause (ff) of Article 1 of the FATCA agreement; (10) "U.S. person" means,- (a) an individual, being a citizen or resident of the United ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count holder by the country or territory of his residence for tax purposes) and date and place of birth (in the case of an individual) of each reportable person, that is an account holder of the account; (b) in the case of any entity which is an account holder and which, after application of due diligence procedures prescribed in rule 114H, is identified as having one or more controlling persons that is a reportable person,- (i) the name and address of the entity, taxpayer identification number assigned to the entity by the country or territory of its residence; and (ii) the name, address, date and place of birth of each such controlling person and taxpayer identification number assigned to such controlling person by the country or territory of his residence; (c) the account number (or functional equivalent in the absence of an account number); (d) the account balance or value (including, in the case of a cash value insurance contract or annuity contract, the cash value or surrender value) at the end of relevant calendar year or, if the account was closed during such year, immediately before closure; (e) in the case of any custodial account,- (i) the total gross amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of sub-rule (1),- (a) "account holder" means the person listed or identified as the holder of a financial account by the financial institution that maintains the account: Provided that a person, other than a financial institution, holding a financial account for the benefit or on account of another person as agent, custodian, nominee, signatory, investment advisor, or intermediary, is not treated as holding the account, and such other person is treated as holding the account: Provided further that in the case of a cash value insurance contract or an annuity contract, the account holder is any person entitled to receive a payment upon the maturity of the contract or any person entitled to access the cash value or change the beneficiary of the contract and 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; (b) "taxpayer identification number" means a number assigned to a person in the country or territory in which he is resident for tax purposes and includes a functional equivalent in case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. (9) (a) The statement referred to in sub-rule (7) shall be furnished to the Director of Income-tax (Intelligence and Criminal Investigation) or the Joint Director of Income-tax (Intelligence and Criminal Investigation) through online transmission of electronic data to a server designated for this purpose under the digital signature in accordance with the data structure specified in this regard by the Principal Director General of Income-tax (Systems). Explanation.-For the purposes of this sub-rule, "digital signature" means a digital signature issued by any Certifying Authority authorised to issue such certificates by the Controller of Certifying Authorities. (b) Principal Director General of Income Tax (Systems) shall specify the procedures, data structures and standards for ensuring secure capture and transmission of data, evolving and implementing appropriate security, archival and retrieval policies. (10) (a) Every reporting financial institution shall communicate to the Principal Director General of Income-tax (Systems) the name, designation and communication details of the Designated Director and the Principal Officer and obtain a registration number; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for meeting its reporting obligation, if such information is not maintained by it under any rule or regulation issued by the regulator. (b) Every reporting financial institution shall maintain information in respect of financial accounts in accordance with the procedure and manner as may be specified by its regulator from time to time so as to enable reporting of information prescribed under this rule and perform due diligence procedure specified under rule 114H. 114H. Due diligence requirement.- (1) An account shall be treated as a reportable account beginning as on the date it is identified as such pursuant to the due diligence procedure specified in sub-rule (3) to sub-rule (8) and, unless otherwise provided, information with respect to a reportable account shall be reported annually in the calendar year following the calendar year to which the information relates. (2) For the purpose of this rule,- (a) "documentary evidence" includes any of the following, namely:- (i) a certificate of residence issued by an authorised Government body, including a Government agency or a municipality, of the country or territory in which the payee claims to be a resident; ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h June, 2014; and (II) in case of other reportable account, the 31st December 2015; (i) "pre-existing entity account" means a pre-existing account held by one or more entities; (j) "pre-existing individual account" means a pre-existing account held by one or more individuals; (k) where a balance or value threshold is to be determined at the end of a calendar year, the relevant balance or value shall be determined as on the last day of the reporting period which ends with or within that calendar year. (3) The due diligence procedure for the purposes of identifying reportable accounts among pre-existing individual accounts shall be the following, namely:- (a) a pre-existing individual account is not required to be reviewed, identified or reported, if,- (i) in case of a U.S. reportable account,- (A) the balance or value as on the 30th June, 2014, does not exceed an amount equivalent to fifty thousand U.S. dollars, subject to sub-clause (vi) of clause (c) of this sub-rule; or (B) which is a cash value insurance contract or an annuity contract, the balance or value does not exceed an amount equivalent to two hundred and fifty thousand U.S. dollars a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the electronic search, or if there is a change in circumstances which results in one or more indicia being associated with the account, then the reporting financial institution shall treat the account holder as resident for tax purposes of each such country or territory for which an indicium is identified, unless it elects to apply sub-clause (v) and one of the exceptions in the said sub-clause applies with respect to that account; (iv) if a "hold mail" instruction or "in-care-of" address is discovered in the electronic search and no other address and none of the other indicia listed in items (A) to (E) of sub-clause (i) are identified for the account holder, the reporting financial institution shall apply the paper record search referred to in sub-clause (ii) of clause (c), or seek to obtain from the account holder a self-certification or documentary evidence to establish the residence or residences for tax purposes of such account holder: Provided that if the paper search fails to establish an indicium and the attempt to obtain the self-certification or documentary evidence is not successful, the reporting financial institution shall report the accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssociated with the account), the reporting financial institution obtains, or has previously reviewed and maintains a record of- (I) a self-certification from the account holder of the country or territory or countries or territories of residence of such account holder that does not include any country or territory outside India; or (II) documentary evidence establishing the account holder's non-reportable status; (c) with respect to high value accounts among pre-existing individual accounts the following enhanced review procedures shall apply, namely:- (i) the reporting financial institution must review electronically searchable data maintained by the reporting financial institution for any of the indicia described in sub-clause (i) of clause (b); (ii) if the reporting financial institution's electronically searchable databases do not capture all of the information referred to in sub-clause (iii) of this clause, then the reporting financial institution shall also review the current customer master file and, to the extent not contained in the current customer master file, the following documents associated with the account and obtained by the reporting financial in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a reportable person; (v) after application of review procedures specified in sub-clauses (i) to (iv) if,- (A) none of the indicia referred to in sub-clause (i) of clause (b) are discovered, and the account is not identified as held by a reportable person as per sub-clause (iv), then further action is not required until there is a change in circumstances which results in one or more indicia being associated with the account; (B) any of the indicia referred to in items (A) to (E) of sub-clause (i) of clause (b) are discovered, or if there is a subsequent change in circumstances which results in one or more indicia being associated with the account, then the reporting financial institution shall treat the account as a reportable account with respect to each country or territory outside India for which an indicium is identified unless it elects to apply sub-clause (v) of clause (b) and one of the exceptions in the said sub-clause applies with respect to that account; (C) a "hold mail" instruction or "in-care-of" address is discovered in the electronic search and no other address and none of the other indicia referred to in items (A) to (E) of sub-clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at account; (ix) a reporting financial institution shall implement procedures to ensure that a relationship manager identifies any change in circumstances of an account and where the relationship manager is informed that the account holder has a new mailing address in any country or territory outside India, the reporting financial institution is required to treat the new address as a change in circumstances and, if it elects to apply sub-clause (v) of clause (b), then it is required to obtain the appropriate documentation from the account holder; (d) review of pre-existing individual account,- (i) in case of a U.S. reportable account which is high value account as on the 30th June, 2014, shall be completed by the 31st December, 2015 and if based on this review such account is identified as a U.S. reportable account after the 31st December, 2014 and on or before the 31st December, 2015, the reporting financial institution is not required to report information about such account with respect to calendar year 2014, but shall report information about the account on an annual basis thereafter; (ii) in case of a U.S. reportable account which is low value account as on the 30th Ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall treat the account as a reportable account and the self-certification shall also include the account holder's taxpayer identification number with respect to such country or territory outside India, subject to sub-rule (5) of rule 114G, and date of birth; (d) where a self-certification has been obtained under clause (b) of this sub-rule for a new individual account and if there is a change of circumstances with respect to such account which causes the reporting financial institution to know, or have reason to know, that the said self-certification is incorrect or unreliable, the reporting financial institution shall not rely on the said self-certification and shall obtain a valid self-certification that establishes the residence or residences for tax purposes of the account holder: Provided that if the reporting financial institution is unable to obtain a valid self-certification, the reporting financial institution shall treat the account as a reportable account with respect to each such country or territory outside India for which an indicium is identified. (5) The following procedures shall apply for purposes of identifying reportable accounts among pre-existing ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve non-financial entity with one or more controlling persons who are reportable persons, or by non-participating financial institutions, shall apply the following review procedures namely:- (i) to determine whether the entity is a reportable person, the reporting financial institution shall,- (A) review information maintained for regulatory or customer relationship purposes (including information collected in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003)) to determine whether the information indicates that the account holder is a reportable person. Explanation.- For the purpose of this sub-clause, information indicating that the account holder is a resident of any country or territory outside India as per tax laws of such country or territory includes a place of incorporation or organisation, or an address in a country or territory outside India; (B) treat the account as a reportable account, if the information as per item (A) indicates that the account holder is a reportable person, unless it obtains a self-certification from the account holder, or reasonably determines based on information in its possession or that is publi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n collected and maintained in accordance with the rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003); (C) for purposes of determining whether a controlling person of a pre-existing account of passive non-financial entity is a reportable person, a reporting financial institution may rely on,- (I) information collected and maintained in accordance with rules made under the Prevention of Money-laundering Act, 2002 (15 of 2003) in the case of pre-existing entity account held by one or more non-financial entity with an aggregate balance or value which does not exceed an amount equivalent to one million U.S. dollars; or (II) a self-certification from the account holder or such controlling person of the passive non-financial entity with an account balance or value which exceeds an amount equivalent to one million U.S. dollars; (D) if any controlling person of a passive non-financial entity is a resident of any country or territory outside India for tax purposes, the account shall be treated as a reportable account; (e) the following additional procedures shall be applicable to pre-existing entity accounts, namely:- (i) review of pre-existing entity acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided that if the entity certifies that it has no residence for tax purposes, the reporting financial institution may rely on the address of the principal office of the entity to determine the residence of the account holder; (B) treat the account as a reportable account, if the information as per item (A) indicates that the account holder is a reportable person, unless it reasonably determines based on information in its possession or which is publicly available, that the account holder is not a reportable person: Provided that if the information as per item (A) indicates that the account holder is an Indian financial institution, or partner jurisdiction financial institution, which is not a non-participating financial institution or a participating foreign financial institution or a non-reporting financial institution then the account shall not be treated as a U.S. reportable account; (ii) determine whether the account holder is a passive non-financial entity with one or more controlling persons who are reportable persons and in making these determinations the reporting financial institution shall follow the following procedures, namely:- (A) for purposes of determining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g financial institution and associated with the beneficiary contains indicia specified in clause (b) of sub-rule (3). (c) the following procedures relating to aggregation of account balance and currency shall apply, namely:- (i) for purposes of determining the aggregate balance or value of financial accounts held by an individual, a reporting financial institution shall be required to aggregate all financial accounts maintained by it, or by a related entity, but only to the extent that the computerised systems of that reporting financial institution links the financial accounts by reference to a data element such as client number or taxpayer identification number, and allows account balances or values to be aggregated; (ii) for purposes of determining the aggregate balance or value of financial accounts held by an entity, a reporting financial institution shall be required to take into account all financial accounts which are maintained by it, or by a related entity, but only to the extent that the computerised systems of that reporting financial institution links the financial accounts by reference to a data element such as client number or taxpayer identification number, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... self-certification, required under sub-rule (6); (b) the reporting financial institution shall report on any new account which is identified pursuant to clause (a) of this sub-rule as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable, by the date which is the later of,- (i) the 31st of May next following the date on which the account is identified as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable; and (ii) forty-five days after the account is identified as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable: Provided that the information required to be reported with respect to such a new account shall be information which would have been reportable had the new account been identified as a U.S. reportable account or as an account held by a non-participating financial institution, as applicable, as of the date the account was opened; (c) by the date that is one year after the date of entry into force of the FATCA agreement, reporting financial institutions shall close any new account described in claus ..... 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