As news reports of mandatory self-certification of NRI bank accounts have begun to appear in the news, some non-resident Indians [NRIs] holding NRI bank accounts might have started wondering what the concern is about. Regularly, NRIs who hold bank accounts in India would have already got information from the banks where they operate their NRI bank accounts of the new laws and regulations that come into effect in 2017 and 2018. Banks would have sent a self-certification form to each account holder so that the account holder could self-certify his or her account.
For those who either did not get the notification from their banks or possibly failed to respond to their banks request to forward in their completed self-certification form and documentation, here is an overview of what all this means.
The government of India has agreed with other nations to exchange bank account information of non-resident Indians holding NRI bank accounts in India, with the tax authorizations of the account holders home countries. It is probably a step to combat tax evasion.
Information for NRIs regarding self-certification of NRI bank accounts:
Why is self-certification needed?
To comply with FATCA/CRS contracts the government of India will submit to foreign nations information about bank accounts in India maintained by their citizens & residents.
To prepare to submit account holder information overseas, Indian banks are collecting information on NRIs account holder’s residency status, tax identification numbers they manage overseas to file their taxes etc. Indian banks are getting this information from their NRI bank accounts holders by asking them to fill out a ‘Self Certification form.’
How can a person self-certify his/her NRI account?
Banks have a self-certification form that they are requesting their NRI account holders to fill and deliver to them. The information asked is fairly simple, and form is just one page. Along with the form, account holders also need to send in copies of their Identification/citizenship documentation.
If a person already completed KYC, it means bank already has all his/her information. Do they still need to self-certify his/her bank account?
KYC and FATCA/CRS are not linked. KYC is for Indian banking security checks, while FATCA/CRS is to comply with agreements India has signed with foreign nations to combat tax evasion. Some of the information required for FATCA/CRS such as account holder’s foreign tax identification number is not included in KYC.
What if a person does not complete the self-certification?
Failure to complete the self-certification will probably result in person NRI bank accounts being blocked. Which would indicate the account holder would not be able to conduct any transaction until they ultimately self-certify and the bank removes the block on the account.
What to do? When a person has an NRI account and not sent any self-certification form?
All banks that allow NRI banking accounts have their own version of self-certification forms. The information is usually the same, but the format may be different. Visit your bank website and download the application form. This can then be sent to your bank by email along with the needed documents. You can also contact your bank for additional guidance on this topic.