New Delhi: India has overhauled its global tax reporting framework to reflect the rapid evolution of digital finance, expanding foreign account tax compliance Act (FATCA) and common reporting standard (CRS) implementation rules to cover specified crypto-assets, central bank digital currency (CBDC) and digital money products, while tightening due diligence norms for financial institutions.
The revised guidance, issued by the central board of direct taxes (CBDT), lays down an updated compliance framework for reporting financial institutions (RFIs), including banks, mutual funds, insurers, custodians and other investment entities, on identifying reportable accounts, validating tax residency and reporting financial information under the country’s Automatic Exchange of Information (AEOI) commitments.
Financial institutions will also have to apply enhanced due diligence to high-value accounts, having more than $1 million in balances, including additional review procedures prior to classifying them for reporting purposes.