The government on Tuesday gave a nod to sign an agreement with the US on Tax Compliance Act. This act will enable exchange of information between the two countries on tax avoidance cases through overseas entities.
The agreement on the Foreign Account Compliance Act (FATCA) would also ensure that Indian corporates would not have to pay 30 per cent withholding tax on their US income, reports PTI.
Prime Minister, Narendra Modi, approved signing of an Inter-Governmental Agreement (IGA) between India and the US for implementation of the FATCA.
Sources said that it also approved on joining the Multilateral Competent Authority Agreement (MCAA) on Automatic Exchange of Financial Account Information (AEOI).
FATCA is US Federal act that requires United States persons, even who resides outside the United States, need to report their financial status held outside of the United States.
This act will enable to keep a track of assets of Indians held abroad including through entities in which Indians are beneficial owners.
Financial Institutions which are FATCA compliant, they will not be required to enter into separate agreements with the US to avoid 30 per cent withholding on their US income, reports PTI.