India: Amended definition of non-reporting financial institution
Central Board of Direct Taxes (CBDT) issued Notification 112-2022
The Central Board of Direct Taxes (CBDT) issued Notification 112-2022 to amend the definition of a “non-reporting financial institution” under rule 114F, sub rule (5) of the Income-tax Rules, 1962.
The amendments are referred to as Income-tax (Thirty Third Amendment) Rules, 2022, and will become effective on the date of publication in the Official Gazette.
The amendments include:
- Substituting clauses (i), (j) and (k) of the definition as below:
- (i) a financial institution with a local client base, in case of any U.S. reportable account
- (j) a local bank, in case of any U.S. reportable account
- (k) a financial institution with only low value accounts, in case of any U.S. reportable account
- Substituting clause (D) of the explanation for the definition was updated to amend the definition of ”treaty qualified retirement fund.” The amendment clarifies that this treatment extends to funds established in India that are operated principally to administer or provide pension or retirement benefits, and are entitled to benefits under an agreement between India and the U.S. on income that derived from sources within the U.S., as a resident of India that satisfies any applicable limitation on benefits requirement.
Read an October 2022 report [PDF 175 KB] prepared by the KPMG member firm in India
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