How to Fill FATCA and Additional KYC for Mutual Funds Online or Offline through CAMS, Karvy or Directly: Effective from November 1st, 2015, all new investors who are looking forwards to purchasing units of mutual funds need to provide additional KYC related information, which is required for the Foreign Account Tax Compliance Act (FATCA)/CRS compliance.
Starting from January 1st, 2016, even existing investors who are willing to make new purchases have to complete the additional KYC requirements. In this article, we talk about What is FATCA? How to make FATCA declaration Online? How to fill the FATCA declaration offline? How to do it directly or via CAMS & Karvy.
- What Form Has to be Filled?
- Who Needs to Fill the Form?
- Why Does One Need to fill Supplementary FATCA, KYC, CRS Self-certification form?
- What is FATCA? How to be a FATCA Compliant for Indian Residents?
- FATCA in a Nutshell
- Who are all Covered Under FATCA?
- Where is the Supplementary KYC, FATCA, CRS forms Available?
- What will be Happening If one does not fill the FATCA, Supplementary KYC Form?
- Reporting The Financial Institution (RFI) in India and its Role
- How to Submit FATCA Declaration form Online?
- Filling the FATCA Details Online on CAMS
- Filling the FATCA Details Online on Karvy
- Submit the FATCA Declaration Form Offline
What Form Has to be Filled?
Supplementary KYC, FATCA, CRS self-certification form has to be filled by the investors in order to comply with the additional KYC requirements.
Who Needs to Fill the Form?
- The form has to be filled up by all joint holders, the guardian of a minor, and the power of the attorney holder.
- It is necessary to be provided by all the individual investors, irrespective of whether they are Indian residents or not.
- Non-individual investors need to submit a separate form that provided the ultimate beneficial owner (UBO) information about similar lines.
- You need to do FATCA with all the Mutual Funds you have invested in (AMCs) along with some for each folio. KARVY and CAMS have come out with PAN-based online filling of the FATCA form, which will update all the details in all fund houses they manage. However, for other fund houses such as Franklin Templeton, you need to contact them separately.
Why Does One Need to fill Supplementary FATCA, KYC, CRS Self-certification form?
The Inter-Governmental Agreement (IGA) between the US and India, signed in July of 2015 as part of the FATCA implementation, required the Indian Financial Institutions to provide all the necessary information for Indian tax authorities is then transmitted to the US automatically.
What is FATCA? How to be a FATCA Compliant for Indian Residents?
FATCA is an act that focuses on instances of deliberate tax evasions by US citizens/residents on income generated in overseas locations.
This implies parking funds outside the US using foreign banks or failing to disclose their assets and investments that are owned abroad, including in the countries of origin, avoid paying taxes to the IRS. This is different from tax avoidance that is a legal way of reducing taxes.
In some countries, including India and the United States, their citizens are taxed on the basis of global income. They have double taxation avoidance agreements within each other.
US citizens who have been reporting income or paying taxes on the income earned in these countries will not be seen as tax evaders under FATCA.
The Act HIRE (Hiring Incentives to Restore Employment) had been enacted in the year 2010 by Unites States legislation has a distinctive chapter 4.
This chapter, known as The Foreign Account Tax Compliance Act (FATCA) and the Section 1360 of the Internal Revenue Service (IRS) code, gives details on the compliance of the rules related to and reporting foreign earnings and assets of the people of the US.
FATCA puts the obligation of reporting on the foreign financial institutions (FFI) that dealing with them. Non-financial foreign companies (NFFE) operating in the US are also expected to report on their holdings.
FATCA in a Nutshell
The FATCA provisions are imposing a 30% withholding tax on the payments to a foreign financial institution (FFI) for not complying with the rules of IRS, which in turn will be placing withhold payments to clients.
US people residing in India will have to continue to report foreign income under the FBAR. They might disclose the previous overseas money under the Overseas Voluntary Disclosure Program (OVDP) 2014.
FATCA doesn’t affect in any way the existing tax rights of the US citizens in India or the Indian tax residents in the United States. Nor does it require the reporting agencies to act as tax collectors for the IRS.
Who are all Covered Under FATCA?
Those whom the United States government considers a ‘US person’ is going to be covered under the act. The following fall under the category of US person.
- A citizen or resident of the US (including a green card holder).
- A corporation, partnership, estate, trust incorporated or created under the US law (US incorporated entity)
- A non-US incorporated entity that has a shareholding of 10% or more or the ownership (Substantial Ownership) held by:
- A person who was born in the United States or is a US citizen or a US resident (including green card holder) or has a US address or US mailing address or US in care of’ or ‘hold mail’ as the sole address.
- The United States incorporated entity as described above.
Where is the Supplementary KYC, FATCA, CRS forms Available?
You can fill this form Online and physically (offline). You don’t need to do both. These forms are also available at the mutual fund house or Registrar and transfer agent (R & R&T) such as CAMS/KARVY branch counters, or you can also download from their offline websites.
Online: The R&T agents like CAMS and KARVY offer the facility of filling up an online form. PAN needs to be submitted to generate the, and an OTP is sent to the registered email ID and the mobile number. It will be updating details in all the fund houses that they manage. However, for the other fund houses, you need to contact them differently.
Offline or Physical submission: The said form, duly signed by the investor, and necessary documents, may be submitted at any of the AMC branch or investor service centre.
What will be Happening If one does not fill the FATCA, Supplementary KYC Form?
If you meet this compliance requirement, then fresh investments (SIP or Lumpsum) will not be accepted from 1st January 2016. One can only redeem their existing mutual fund units.
To lower the reporting burden, few tops and sizeable mutual fund houses like HDFC, ICICI, Birla, Reliance, etc., have stopped accepting fresh investments from US residents and NRIs based in the US. NRIs based on other countries (other than the US/Canada) can invest in all the mutual fund schemes.
Any financial institution that fails to comply will need to pay a 30% penalty on all its United States revenues, including the dividend, fees, interest, and sales. If one is an Indian base in the US and trying to hide the information from the Indian government, then under the new Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, individuals having unaccounted overseas assets were allowed to come clean by declaring that their assets till September 30th, 2015, and paying tax and penalty of 60%.
Those who are unable to declare their unaccounted overseas wealth during the voluntary compliance period will now have to pay tax and penalty of 120 percent and face a jail term that could be extending up to 10 years.
Reporting The Financial Institution (RFI) in India and its Role
RFI involves the custodial and the depository institutions, the specified insurance companies and the investment entities.
This means mutual fund companies, banks, trust companies, brokerage firms, hedge funds, insurance companies, savings and loan associations, credit unions, NBFC, and superannuation and retirement plan administrators.
For the purpose of FATCA reporting, an RFI is either registered or a resident in India and includes its Indian branches. It also covers the Indian branches of foreign financial institutions.
A company that provides trading and investing services on the behalf of one of the particular customer and insurance companies which only deal with general and term life insurance or indemnity reinsurance doesn’t have to report accounts.
No financial institutions are currently exempt by the US authorities. However, this could change in the future.
- Follow particular procedures to confirm the status and identity of a new customer.
- Check the existing accounts for confirming their FATCA status. Ask for the documentation and extra information from the current customers.
- Register themselves with the Indian Tax authorities (CBDT) and the Internal Revenue Service (IRS) portal under the inter-government agreement signed by the United States and India.
- Complete any reporting required that CBDT and RBI specify RBI regarding the FATCA.
- They will review the financial accounts of individuals and entities and will provide information on ones that meet the specific threshold limit for the savings/investment balance.
- Banks need to provide income reports on the highest daily value in U.S. dollars in any year and the transaction details of each such account.
- Corporations that are not listed or any business entity that is registered outside the U.S. but has U.S. Person/s on board with at least 10% stake in ownership have to provide relevant details about them.
- FII must also be required to withhold 30% of certain payments to these account holders who are unable to provide self-certification or submit form 8938 for the foreign income under FATCA.
* The RBI has clarified income reports of the United States persons with Indian assets and income will be in rupees.
How to Submit FATCA Declaration form Online?
You will have to provide information to CAMS once for all funds it services, Karvy, for all its benefits. For example, suppose you have invested in HDFC Balanced Fund, HDFC Equity Fund, Reliance Gold Fund, Franklin Templeton Short Term Fund, ICICI Prudential Blue Chip, then through CAMS.
In that case, you could provide details to the HDFC Fund for HDFC Balanced Fund, HDFC Equity Fund, ICICI Mutual Fund for the ICICI Prudential Blue Chip. Through Karvy, you could update your details to Reliance Mutual Fund and Franklin Templeton Investments to Franklin Mutual Fund.
- Karvy Mutual Fund Services
- CAMS
- Sundaram BNP Paribas Fund Services
- Franklin Templeton Investments
Filling the FATCA Details Online on CAMS
If one has invested in mutual fund schemes that were served by CAMS such as DSP BlackRock Mutual Fund, HDFC Mutual Fund, HSBC Mutual Fund, JP Morgan Mutual Fund, Kotak Mutual Fund, Birla Sun Life Mutual Fund, IIFL Mutual Fund, SBI Mutual Fund, IDFC Mutual Fund, L&T Mutual Fund, ICICI Prudential Mutual Fund, PPFAS Mutual Fund, Shriram Mutual Fund, Tata Mutual Fund, Union KBC Mutual Fund
- Visit the official website of CAMS.
- Select the AMC name, provide your PAN details, Bank Account details and Date of Birth details. You will be receiving OTP (One Time Password) on the registered mobile number.
- For field Country of the Tax Residency apart from India, select No if you are a resident of India. If your selection is ‘YES’, you will have to provide other details.
- On submission at CAMS, you will get the submission details. It mentions clearly that you have to submit FATCA details about the fund CAMS services only once. Acknowledgement is sent to the email id.
Filling the FATCA Details Online on Karvy
If one has invested in mutual fund schemes that are serviced by Karvy, stated below.
Baroda Pioneer Mutual Fund, AXIS Mutual Fund, Deutsche Mutual Fund, BOI AXA Mutual Fund, Edelweiss Mutual Fund, Canara Robeco Mutual Fund, Goldman Sachs Mutual Fund, Indiabulls Mutual Fund, IDBI Mutual Fund, LIC Nomura Mutual Fund, Sahara Mutual Fund, M Financial Mutual Fund, Motilal Oswal Mutual Fund, Peerless Mutual Fund, Quantum Mutual Fund, Mirae Asset Mutual Fund, DHFL Pramerica Mutual Fund, Reliance Mutual Fund, Principal Mutual Fund, Religare Invesco Mutual Fund, Taurus Mutual Fund, UTI Mutual Fund
- Visit the official website of Karvy
- Enter the PAN Number and click on Generate OTP.
- Enter OTP details and click on submit
- Please submit the details as they have been mentioned earlier
Submit the FATCA Declaration Form Offline
Submitting the declaration of FATCA to CAMS offline: One is able to download the CAMS FATCA Declaration form and submit the finished form at any of the CAMS customer service centres or post it to the address given.
M/s. Computer Age Management Services Pvt. Ltd.
Unit Of – The Central Projects, The Rayala Towers, 158 Anna Salai, Chennai – 600002
Submitting the FATCA declaration to Karvy offline: One can download the Karvy FATCA Declaration Form and post the finished form to the address given.
Karvy Computershare Pvt. Ltd., Karvy Selenium Tower B,
Unit Of – FATCA / CRS / UBO / Supplementary KYC,
Plot Nos. 31 & 32 | Financial District | Nanakramguda,
Serilingampally Mandal | Hyderabad – 500032 | India.