FATCA Compliance Requirements & Impact on Your Mutual Fund Investments

All existing and new investors of Mutual Fund schemes have to comply with a new compliance and reporting requirement called ‘FATCA Declaration‘.

If you are an existing MF investor you need to submit FATCA self-declaration form by 31st December, 2015. If you do not meet this compliance requirement then fresh investments (SIP or Lump sum) will not be accepted from 1st Jan, 2016. You can only redeem your existing mutual fund units.

As per AMFI’s (Association of Mutual Funds in India) circular, from 1st January 2016 all Mutual Funds have been advised to make it mandatory for existing investors to;

• Provide additional KYC details (like Income slab, Occupation, Net worth, Politically Exposed Status etc.,) in order to make additional purchases (including switch) in their MF accounts.
• Provide missing details and complete IPV (In-Person Verification).
• Update the Ultimate Beneficial Ownership (UBO) details in their existing accounts.
• Submit FATCA / CRS (Common Reporting Standards) form.

What is FATCA?

In 2010, the US has enacted a new law called Foreign Account Tax Compliance Act (or FATCA). According to this Act, any individual who is a Resident of USA (green-card holders) or who is financially connected to the US or who has any tax residency in US has to disclose his or her foreign income and investment details to the USA tax authorities.

NRIs (Non Resident Indians) who have income or have made investments in India also have to disclose about their foreign income to the USA tax authorities.

The Indian Govt has accepted and signed the FATCA agreement with U.S.A. So, to comply  with these new reporting requirements all financial institutions (like brokerage houses, mutual funds, insurance companies,banks etc.,) in India are now required to furnish information about their clients to the Indian Government. If you are not connected to the US financially then you can submit a simple FATCA online form.

How to submit FATCA Declaration form online?

If you have invested in mutual fund schemes serviced by CAMS (Schemes offered by Birla Sunlife, DSP Blackrock, HDFC, HSBC, ICICI Prudential, IDFC, IIFL, JP Morgan, Kotak, L&T, PPFAS, SBI, Shriram, TATA or Union KBC), click on the below link.

• Visit CAMS online.
• Select AMC name, provide your PAN, Bank Account and Date of Birth details. You will receive OTP (One Time Password) on the registered mobile number.
• Select ‘No’ as ‘Country of Tax Residency other than India’. (If your selection is ‘YES’, you have to provide other details)

If you have invested in mutual fund schemes serviced by Karvy (schemes of Axis, Goldman, Canara, Deutsche, Edelweiss, IDBI, Franklin, LIC Nomura, Motilal Oswal, Mirae, Principal, Quantum, Religare, UTI, Taurus etc.,), click on the below link.

• Visit Karvy website.
• Submit the details as mentioned above.

It is advisable to submit the online form available on both the websites.

How to submit FATCA declaration form offline?

• You can also download CAMS FATCA Declaration form and submit the completed form at any CAMS customer service centers or post it to the below address;

M/s. Computer Age Management Services Pvt. Ltd.

Unit: Central Projects, Rayala Towers, 158 Anna Salai, Chennai – 600002

• You can also download FATCA Declaration form and mail the completed form to the below address;

   Karvy Computershare Pvt. Ltd., Karvy Selenium Tower B,

Unit – FATCA / CRS / UBO / Supplementary KYC,

Plot Nos. 31 & 32 | Financial District |Nanakramguda,

Serilingampally Mandal | Hyderabad – 500032 | India.

FATCA Compliance & Non-Resident Indians 

To lower the reporting burden, few top and large mutual fund houses like HDFC, ICICI, Birla, Reliance etc., have stopped accepting fresh investments from US residents and NRIs.

If an existing mutual fund investor acquires NRI Residential status or becomes a resident of US or Canada,  all facilities such as switch of schemes, dividend reinvestment, systematic investment plans, systematic transfers, etc, are currently being stopped by these AMCs and the investor will be made to sell out.

But not all mutual funds have stopped taking investments from US-based NRIs. Many are ready to comply with FATCA. We need to wait and see if FATCA will deter financial institutions from accepting investments from small and retail NRI investors.

Kindly note that NRIs based out of other countries (other than US/Canada) can invest in all mutual fund schemes.

(Image courtesy of Stuart Miles at FreeDigitalPhotos.net)

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