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The National Securities Depository Limited (NSDL) permits members to the National Pension Scheme (NPS) to amend their Foreign Account Tax Compliance Act (FATCA) self-certification online. Before we go any further, you need to understand what FATCA is and why you must self-certify.

NSP Overview

The National Pension Scheme (NPS), formerly known as the New Pension Scheme, is a pension system available to all Indian residents. It is also available to NRIs if they are Indian nationals. The NPS invests its members’ payments in equities and debt, and the ultimate pension amount is determined by the success of these assets.

An NPS account can be opened by any Indian citizen between the ages of 18 and 65. The NPS reaches maturity at the age of 60, although it can be prolonged until the age of 70. After three years, you can withdraw up to 25% of your contributions from the NPS for certain objectives such as house purchase, children’s education, or catastrophic sickness.

FATCA Overview

The Foreign Account Tax Compliance Act, or FATCA, is a tax law enacted in the United States to combat tax evasion and promote openness between nations regarding money earned by US taxpayers in foreign countries. All US taxpayers must be FATCA compliant and self-certify in countries where they have investments by completing a FATCA form.

Necessity of FATCA

FATCA strives to increase openness and reduce tax avoidance. The IRS hopes to monitor and reduce tax evasion by keeping track of revenue generated from overseas holdings. FATCA was approved by the Indian government in 2015. This agreement requires NRIs living in the United States and investing in India to self-declare FATCA compliance. According to the Income Tax Rules of 1962, they might do so by completing Form 61B. Following that, Indian financial institutions would do due diligence and validate the self-declaration.

FATCA applies to all NRIs and PIOs who work in the United States. Fixed deposits, National Pension System, mutual funds, PPF, equities, capital gains, and bank interest are just a few of the Indian investments that must be disclosed under FATCA. Household assets, antiques, automobiles, jewellery, and collectables are examples of assets that are exempt from FATCA.

Failure to submit the FATCA form may result in the freezing of all bank accounts and the suspension of investments in fixed deposits, mutual funds, the National Pension System, and PPF, among other things. Because FATCA is an effort to combat tax avoidance, NRIs living in the United States who receive money from Indian investments must report their income.

Self Certification or Fatca Declaration For NPS

Self-certification is the procedure through which Indian financial institutions request that NRI account holders authenticate a few information about themselves. Following that, Indian financial institutions would do due diligence and validate the self-declaration. If you created an NPS account with NSDL on or after July 1, 2014, and did not self-certify, it would be blocked.

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Declaration of FATCA in NPS Account and Compliance

To make one’s NPS account FATCA compliant, follow the steps outlined below.

  • To begin, go to the NSDL website by clicking on this link: https://www.cra-nsdl.com/CRA/ for FATCA online certification.
  • Second, you must choose FATCA compliance from the list of possible alternatives.
  • The page will be routed to the tab for self-certification. Enter your PRAN number here and press the submit button.
  • You must now complete the FATCA declaration form with information such as your name, PAN number, nationality, residence, city, and country of birth, occupation, and income. If you are a resident of another country, you must additionally provide your tax residency number and click submit.
  • Sign the declaration and authorization by checking the box.
  • Finally, a one-time password (OTP) will be issued to the registered cellphone number. As an NPS subscriber, you must authenticate in order to complete the NPS FATCA self-declaration online.
  • The screen will show an acknowledgement of FATCA certification. As proof, save the NPS FATCA certification acknowledgement number.

NPS FATCA Form

The form for FATCA declaration certification in NPS may be downloaded from the URL provided below.

https://npscra.nsdl.co.in/download/pdf/FATCA%20Self%20Declaration%20Format.pdf

Filling the Form

Individual NPS subscribers can obtain the FATCA self-declaration form by clicking here.

The following sections of the self-certification form must be completed:

Basic information: Fill up your name, PAN Card number, and date of birth in this area.

Part I: In this part, you must provide your country of birth, citizenship, and place of residence for tax reasons, as well as whether you are a US citizen or not.

Part II: If the nation stated in the preceding section is India, you can go to the following step and sign the form. Otherwise, you must provide the Tax Identification Number (TIN) or a comparable equivalent from the nation where it was issued.

Part III: Declaration: All clients, whether residents of India or not, must sign the declaration here. You acknowledge in this statement that all of the information supplied is accurate and correct. You must also sign the declaration and provide your date and name.

Part IV:  Self-Certification: This section must be completed only if the nation listed in Part 1 is not India and the Tax Identification Number or its equivalent is not available. This section must also be completed by those who are US citizens but do not have a TIN. You must declare here that you are not a US citizen and are not a tax resident of any other nation. You do, however, have a relationship outside of India. You must sign the statement and provide evidence here. Passport, Driving License, PAN Card, Election ID Card, UIDAI letter, NREGA Job card, or any other Government Issued ID Card can be submitted.

FATCA Declaration For NPS – FAQs

Q1. How do I check the FATCA compliance status?

You can visit the https://cra-nsdl.com/CRAOnline/FatcaDirectLoginNO.html and enter your PRAN number to check the status.

Q2. When should I submit the FATCA self-certification?

The FATCA declaration form can be physically submitted to the National Pension Scheme. Physical FATCA certification for NPS must be sent to the Central Recordkeeping Agency CRA at the following address:

NSDL e-Governance Infrastructure Limited, Kamala Mills Compound, Senapati Bapat Marg, Lower Parel, Mumbai – 400 013.

Q3. Why is FATCA important?

FATCA is critical since it has already been informed that failure to submit this self-declaration would result in the blocking of the NPS account. However, no accounts were really banned later on. However, if you do not file this declaration, you will not be able to:

Contribute to or withdraw funds from your NPS or PRAN account.

Q4. Is FATCA mandatory for NPS?

Subscribers for APY/NPS-Lite must submit a completed FATCA self-certification form to their relevant APY-Service Provider (SP) / Aggregator / NPS-Lite Accounting Office (NL-AO) or CRA. Please keep in mind that online FATCA self-certification is not available to APY/NPS-Lite members.

Q5. What is a TIN number in FATCA?

Taxpayer Identifying Number (TIN) is a nine-digit identification number used by the Internal Revenue Service (IRS) to administer tax regulations in the United States. It is issued by either the Social Security Administration (SSA) or the Internal Revenue Service (IRS).

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