The central government seems to be getting tough at foreign account holders. In the latest development, the banks, where these accounts are held, have asked the account holders to disclose their tax residency status before Christmas. According to the reports, if the disclosure of tax residency status is not done by the said date, the banks and other financial institutions will share their details with the Indian Government.
These developments have triggered fear and confusions among such individuals. A number of such individuals did not report their foreign assets in the income tax filing. Others, who come under the status of non-resident Indians, have also been asked to provide their tax residency details because it is being speculated that these NRIs have also stocked their money in the tax heavens to escape from the taxes in the respective countries. A report, however, suggests that if the account holders closed their accounts before December 31st, 2015, they will be able to not get under the income tax radar, at least not for now.
The emails and letters sent to the account holders by their respective banks, clearly state that the details of their accounts and transactions will be shared with the respective tax authorities if they do not provide complete details by the said date. In a case of not hearing back from the account holders, the banks will share information such as bank account number, address, current balance and the transaction history showing the names of individuals or organisations involved in the transactions.
The development comes as a part of Automatic Exchange of Information and Common Reporting Standards. Over 90 countries, including UAE, Singapore, India, UK and Mauritius have agreed to follow and share real-time information with other countries.