We have already seen What is FATCA and FATCA regulations.You can learn more on FATCA and check the post here for Part1.
In this second part of series, we’re going to see how to file KYC FATCA forms with CAMS, KARVY to invest in mutual funds.
This is not very different from KYC procedure of residential investors but has few additional checks or declarations.
Anybody willing to invest in Indian mutual funds must finish these procedures.
CAMS, KARVY are registered legally to accept/store KYC filings and declarations.
How to file KYC FATCA forms in CAMS, Karvy to invest in Indian mutual funds.
How to update KYC FATCA forms with CAMS, KARVY online
For new accounts opened from 01 January 2016 under Rule 114H(4)(a) –
Any individual or non-individual account opened by US reportable persons above threshold limits has to be accompanied by a FATCA complaint declaration at the time of opening or within 90 days.
This should include account holder’s name, residence address, TIN, jurisdiction for tax purposes, and date of birth. It must be signed, dated and affirmed by the account holder.
- Fixed deposits will be linked to existing savings account with updated KYC, and treated as part of that account.
Mutual Funds and KYC/FATCA rules
From January 1, 2016, all existing and new investors keen on purchasing/ maintaining or switching mutual funds have to provide fresh or additional KYC information for FATCA compliance, as per AMFI guidelines:.
- Individual to provide FATCA declaration and KYC with details like Country of Birth/Incorporation, Place of Birth/Incorporation, Address Type (Residential, Business, Registered Office] for chosen address, Occupation, Gross Income, Net Worth, PEP (Politically Exposed Person), certain Corporate service (for Non-Individuals), Ultimate Beneficiary Owner(s)/Controlling Person(s) (for select Non-Individuals)
- NRI will have to provide details on TIN (or equivalent), Resident Country for TAX and Identification Type(specify whether TIN or Other)
- Non-Individual investors to provide details on Ultimate Beneficial Ownership (UBO).
- Individual to provide missing details in KYC and complete In-Person Verification (IPV)
FATCA and KYC forms
You can fill submit FATCA-CRS Declaration, UBO Declaration, Supplementary KYC Information forms online through mutual funds website or download forms and submit physical forms at counters in AMC branches.
You can also submit one KYC form for multiple mutual funds through transfer agent/registrar sites like CAMS or Karvy. If you have funds serviced both registrars, Update KYC in both sites.
If you refuse to provide FATCA or UBO declaration, and fail to amend KYC with fresh details, your transaction on MF will be stopped. You will only be able to redeem funds.
Top 5 balanced mutual funds in India
Submit FATCA form online to CAMS
- If you’ve invested in mutual funds with CAMS as transfer agent, follow these steps –
- You will receive the OTP (One time password) on registered mobile no. and email id both. Enter the OTP and submit.
- After submitting OTP, form will be visible on bottom of the same page.
- Fill mandatory information. Unless you are NRI, Select ‘No’ for Country of Tax Residency. If you select ‘YES’, provide necessary details.
- Click on declaration, and then click on submit
- After submitting the information you will receive a message that KYC is successfully updated on mobile or by email. You don’t have to update for other AMCs serviced by CAMS.
- New Investors –
- Provide relevant details in second part of form
- Select AMC names of your mutual funds and provide your details
Provide PAN number or allotted PERKN number (if you’re exempt from owning PAN CARD)
- You will receive the OTP (One time password) on registered mobile no. and email id both. Enter the OTP and submit.
- After submitting OTP, form will be visible on bottom of the same page.
- Fill mandatory information. Unless you are NRI, Select ‘No’ for Country of Tax Residency. If you select ‘YES’, provide necessary details.
- Click on declaration, and then click on submit.
- After submitting the information you will receive a message that KYC is successfully updated on mobile or by email. You don’t have to update for other AMCs serviced by CAMS.
Submit FATCA form online to Karvy
- If you’ve invested in mutual fund schemes with Karvy as transfer agent, follow these steps –
- Visit Karvy website for online filing
- Individual Investors –
- Click here for Individuals
- Enter PAN number and generate OTP
- Provide your details in form. Receive acknowledgement message on mobile or by email
- Non-individual Investors –
- Click here for non-Individuals
- Enter PAN, email ID and Bank account number. Generate OTP
- Download form, provide your details, sign form, scan first and second page and upload them.
- Receive acknowledgement message on mobile or by email
Update FATCA form offline for mutual funds KYC
- Download Declaration form from CAMS site, print, fill form, and submit completed form at any CAMS customer service centre. You can also post it to this address –
M/s. Computer Age Management Services Pvt. Ltd.
Unit: Central Projects,
Rayala Towers, 158 Anna Salai, Chennai – 600002, India
- Download Declaration form from Karvy site, print, fill form, and submit completed form at nearest Karvy Computershare branch. Download the declaration form for print, fill and submit at our nearest Karvy Computershare branch –
- Form for Individuals here
- Form for Non-Individuals here
- You can send the hard copies of the filled and signed declarations to this 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
- MF Utility – You can use mutual fund aggregated platform MF Utility to comply with FATCA for all the mutual funds you hold. You require a Common (CAN) to use this system. Click here to submit details.
Implication of FATCA on taxed foreign assets
Internal Revenue Code makes it mandatory for every US person to pay tax on global income. Under article 6 of Double Taxation Avoidance Agreement (DTAA) between India and US, you pay taxes on Indian assets and income in India .
You can either claim exemptions for taxes paid in India or seek tax credit/refund for double tax paid from IRS.
As an NRI, you can choose to follow IRS rules or follow provisions of DTAA, whichever is more beneficial.
New FATCA Penalties
Wilful failure to fill the form will result in a minimum penalty of $10000 and go up to 40% of asset/investment abroad.
This will be in addition to any tax payable on that income and interest on late payment.
US person and FBAR (Foreign Bank Account Report)
In addition to FATCA, US persons will have to file an annual FBAR declaration with United States Treasury Department before 30th June of each year through FinCEN Form 114.
Under this rule, they have to declare foreign financial accounts –
- Have/had signature authority or financial interest in at least one financial account located abroad.
- Aggregate value of foreign financial accounts exceeded $10,000 at any time during calendar year.
- Reporting even when account does not creates taxable income.
- Report details like Name, Type of filer, Type of account, SSN or ITIN, Name and Address of the foreign account, Account number or any other designation and highest value.
FBAR Penalties
Non-wilful failure to file an FBAR comes with a $10000 fine from IRS which may be waived, if you can provide reasonable cause for delay in filing.
Wilful FBAR non-filing leads to criminal penalty of $250000 and up to 10 years in jail.
FBAR violations can force you to cough up 50% of foreign bank account or $100000 whichever is more in civil penalties.
Foreign bank accounts exempt from FBAR filing include that of US military banking facility, trust beneficiaries (if US person reports the account on behalf of trust), Nostro accounts, US person in included in joint FBAR, governmental entity, Owners and beneficiaries of US IRA, international financial institution, and beneficiary of tax-qualified retirement plan.
| Types of Foreign Assets and Whether They are Reportable | ||
| FATCA | FBAR | |
| Financial accounts (deposit and custodial) held at FFI | Yes | Yes |
| Financial account held at foreign branch of US financial institution | No | Yes |
| Financial account held at a US branch of FFI | No | No |
| Foreign financial account with signature authority | No, unless you have an interest in account | Yes with exceptions |
| Foreign stock or securities held in a financial account at FFI | Account is subject to reporting, but contents of account aren’t reported separately | Account is subject to reporting, but contents of account aren’t reported separately |
| Foreign stock or securities not held in a financial account | Yes | No |
| Foreign partnership interests | Yes | No |
| Indirect interests in foreign financial assets through an entity | No | Yes, if ownership or beneficial interest is greater than 50% interest in entity. |
| Foreign mutual funds | Yes | Yes |
| Domestic mutual fund investing in foreign stocks and securities | No | No |
| Foreign accounts and foreign non-account investment held by foreign or domestic grant trust for which you are grantor | Yes, both foreign accounts and foreign non-account investment assets | Yes, foreign accounts |
| Foreign-issued life insurance or annuity contract with a cash-value | Yes | Yes |
| Foreign hedge funds and foreign private equity funds | Yes | No |
| Foreign real estate held | No | No |
| Foreign real estate held through foreign entity | No | No |
| Foreign currency held | No | No |
| Precious Metals held | No | No |
| Personal property such as art, antiques, jewellery, cars and other collectibles | No | No |
| Social Security type program benefits provided by foreign government | No | No |
Delinquent FBAR Submission Procedure
IF US taxpayer hasn’t filed a required FBAR, but isn’t currently being investigated by IRS, then they should file delinquent FBARs along with statement to explain the delay.
As FBARs are filed online through FinCEN, select reason for late filing on form’s cover page or enter your explanation using ‘Other’ option.
Those unable to file online can call to find alternatives filing methods. If you’ve paid taxes and reported foreign income, you may escape penalty for filing delinquent FBARs.
Offshore Voluntary Disclosure Program (OVDP)
The IRS is allowing NRIs to disclose unreported foreign assets and through 2014 scheme.
OVDP requires you to provide eight years of tax returns and pay a 50% penalty on undisclosed foreign assets.
Aimed at people who transfer funds offshore tax havens, this program charges you heavy penalty on all your assets.
Streamlined Foreign Offshore Procedures (SFOP)
If you haven’t disclosed foreign assets due to ignorance of tax rules, SFOP is a better option for you.
Key targets are US persons living abroad who haven’t filed US taxes and FBAR for years due to mistaken belief.
The new rules will allow more NRIs to seek amnesty. There are lower penalties in SFOP and you can modify previous tax filings. You have to “self-certify” that non-compliance was not wilful.
This scheme rewards non-wilful taxpayers for disclosing offshore assets as they pay minimal tax and low penalty. You only have to file amended income tax returns for three years and face zero penalty on account balance.
Disclosure: Though I have tried to ensure the facts are accurate, we do not claim full knowledge of the US tax procedures. For more information, consult your qualified tax advisor in US or India.
Share your experience and if any correction needed then let us know in comments below. Might help other NRIs.
Have you complied with additional KYC and FATCA requirements with Indian Mutual Fund Institutions? Did you submit FATCA declaration to CAMS, Karvy online? Have you been filing FBAR regularly?
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