The primary entities required to submit FATCA (Foreign Account Tax Compliance Act) information are Indian financial institutions and mutual funds. However, indirectly, individuals opening accounts with these institutions might also need to provide information related to their tax status.
Here's a breakdown:
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Indian Financial Institutions/Mutual Funds: These institutions are obligated to identify and report information about financial accounts held by "Specified US Persons" to the Indian tax authorities, who then transmit this information to the IRS (Internal Revenue Service) in the United States.
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Individuals Opening New Accounts: When opening a new account with an Indian financial institution or mutual fund, you'll likely be required to provide information regarding your tax residency. This is to help the institution determine if you fall under the category of a "Specified US Person." Failing to provide this information can result in the financial institution refusing to open the account.
In summary:
- Direct Obligation: Indian financial institutions and mutual funds have a direct obligation to submit FATCA-related information.
- Indirect Obligation: Individuals may need to provide tax-related information to financial institutions to allow them to fulfill their FATCA reporting obligations. This information helps the financial institutions determine if they are required to report the individual's account to the IRS.
Therefore, while individuals don't directly submit FATCA reports, they are indirectly involved through the information they provide to their financial institutions.
