India: CRS clarifications
India’s tax authority issued a circular clarifying the reporting of accounts other than U.S. reportable accounts
CRS clarifications
India’s tax authority on 26 July 2023, issued a circular clarifying the reporting of accounts other than U.S. reportable accounts under the common reporting standard (CRS) regime.
The clarifications are as follows:
- Treaty qualified retirement fund: A treaty qualified retirement fund in India is defined as a fund entitled to benefits under the India and U.S. agreement on income derived from U.S. sources. The fund operates primarily to provide pension or retirement benefits and is considered a non-reporting financial institution under Rule 114F(5)(b). While it qualifies as an exempt beneficial owner under U.S. Internal Revenue Code (IRC) sections 1471 and 1472, it is not treated as a non-reporting financial institution under the CRS for accounts other than U.S. reportable accounts. In light of this, a treaty qualified retirement fund will not be considered a non-reporting financial institution for the purpose of maintaining and reporting information for reportable accounts, except for U.S. reportable accounts as defined in Rule 114F(11) of the income tax rules.
- Non-public fund of the armed forces: A non-public fund of the armed forces established in India for the welfare of current and former members of the armed forces with tax-exempt income is considered a non-reporting financial institution under 114F(5)(c). While the fund qualifies as a non-reporting financial institution and an exempt beneficial owner under the FATCA IGA, it is not treated as a financial institution under CRS due to its classification as an active non-financial entity. In light of this, a non-public fund of the armed forces will not be treated as a financial institution for any reportable account other than a U.S. reportable account, as defined in Rule 114F(11) of the income tax rules.
- Gratuity fund: A gratuity fund established under the payment of Gratuity Act of 1972 is a fund used to provide gratuity payments to certain types of employees of an Indian employer. It is considered a non-reporting financial institution under rule 114F, provided that it is also a financial institution under the same rule. While it qualifies as a non-reporting financial institution and an exempt beneficial owner under the FATCA IGA, it is not explicitly mentioned as a non-reporting financial institution under CRS.
Read an August 2023 report [PDF 685 KB] prepared by the KPMG member firm in India
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