Staying FATCA Compliant with Your NPS Account
Staying FATCA Compliant with Your NPS Account
The National Pension Scheme (NPS) is a retirement savings plan available to Indian citizens and Non-Resident Indians (NRIs) with Indian citizenship. To ensure transparency and prevent tax evasion, the NPS requires NRIs residing in the United States to comply with the Foreign Account Tax Compliance Act (FATCA).
What is FATCA?
FATCA is a US law that aims to improve tax compliance by identifying US taxpayers holding financial accounts overseas. Under a bilateral agreement with India, NRIs living in the US must declare their financial holdings in India, including their NPS accounts.
Why is FATCA Declaration Necessary for NPS Accounts?
FATCA compliance helps ensure transparency in financial dealings and discourages tax avoidance. By self-certifying their FATCA status, NRIs can avoid potential penalties and account restrictions.
Who Needs to File a FATCA Declaration for NPS?
All NRIs residing in the US, regardless of their income level, must declare their FATCA status for their NPS accounts. This includes NRIs who hold investments in fixed deposits, mutual funds, the National Pension System (NPS), and Public Provident Fund (PPF).
How to Declare FATCA Status for Your NPS Account?
The National Securities Depository Limited (NSDL) allows online self-certification for FATCA compliance for NPS accounts. Here's how to go about it:
- Visit the NSDL website: Access the NSDL website for FATCA online certification: https://www.cra-nsdl.com/CRA/.
- Select FATCA Compliance: Choose the "FATCA Self-Certification" option.
- Enter PRAN Number: Log in using your Permanent Retirement Account Number (PRAN).
- Complete the FATCA Declaration Form: Fill out the form with details like your name, PAN number, nationality, residential address, and date of birth. If you're a resident of another country, provide your Taxpayer Identification Number (TIN) as well.
- Review and Submit: Carefully review the information you've entered. Once confirmed, submit the form.
- Verify with OTP: An OTP (One-Time Password) will be sent to your registered mobile number. Enter the OTP to complete the online self-declaration process.
- Save Acknowledgement: The screen will display an acknowledgement confirming your FATCA certification. Save the acknowledgement number to refer later.
Alternative: Offline FATCA Declaration
If you cannot access the online portal, you can download the FATCA self-declaration form from the NSDL website: https://www.npscra.nsdl.co.in/FATCA-Self-Declaration.php. Print the form, fill it out completely, and submit it physically to the Central Recordkeeping Agency (CRA) at the NSDL address mentioned on the form.
What Information Do I Need for the FATCA Declaration Form?
The FATCA self-declaration form typically requires the following information:
- Basic Information: Your full name, PAN card number, and date of birth.
- Tax Residency: Your country of birth, current tax residency country, and whether you are a US citizen.
- Tax Identification Number: If you're not a resident of India, provide your TIN or equivalent issued by your resident country.
- Declaration: Document signed by you stating the information given is accurate.
- Self-Certification (Optional): If you're not a resident of India and don't have a TIN, or if you're a US citizen without a TIN, you'll need to self-certify your status and provide supporting documents like a passport, driving license, or government-issued ID card.
Consequences of Non-Compliance
Failure to submit a FATCA declaration could lead to restricted access to your NPS account, including contribution limitations and withdrawal suspensions. In severe cases, your account might be frozen entirely.
Maintaining FATCA Compliance
It's crucial to stay updated on any changes to FATCA regulations. The NSDL website serves as a reliable source for the latest information and updates.
By following these steps and keeping your FATCA declaration current, you can ensure smooth operation of your NPS account and avoid any potential complications.