What is FATCA?
FATCA stands for the Foreign Account Tax Compliance Act, a US law introduced to curb tax evasion and strengthen international financial transparency. While it is a US regulation, FATCA has implications for Indian financial institutions and investors—especially NRIs residing in the US who hold investments in India.
In the Indian context, FATCA applies when NRIs in the US invest in instruments such as NPS, mutual funds, fixed deposits, equities, or earn bank interest in India. To remain compliant, such investors must submit a self-certified FATCA declaration with the relevant financial institution.
For example, if an NRI has invested in the National Pension System (NPS), submitting the NPS FATCA declaration is mandatory to keep the account active and compliant.
For NRIs seeking simpler, predictable investment options in India, Bajaj Finance Fixed Deposits offer stable returns without market-linked volatility. Check latest FD rates.
What is FATCA?
FATCA was enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act in the United States. Its primary objective is to improve tax compliance among US taxpayers who hold financial assets outside the US.
Under FATCA, foreign financial institutions in participating countries must report information about assets held by US taxpayers to US authorities. In parallel, US taxpayers are required to disclose their foreign holdings in their annual tax filings.
India adopted FATCA in 2015, making it mandatory for Indian financial institutions to collect FATCA declarations from relevant investors and report the required details.
Compared to compliance-heavy instruments, fixed deposits remain one of the most straightforward investment avenues for NRIs who prefer clarity and ease.
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What is NPS
The National Pension System (NPS) is a retirement-focused initiative launched by the Government of India in 2004. It aims to provide long-term financial security by investing contributions across equity and debt markets.
NPS is open to Indian citizens and NRIs aged 18 to 70 years. Accounts mature at age 60, with an option to extend contributions until 70. Returns under NPS are market-linked and vary based on asset allocation and market performance.
Since NPS involves financial investments in India, NRIs residing in the US must complete the FATCA declaration to keep their accounts operational.
If you prefer guaranteed returns over market-linked outcomes, Bajaj Finance fixed deposits can complement retirement-focused investments like NPS. Invest in a Bajaj Finance FD and start earning up to 7.30% p.a. returns.
Why is the NPS FATCA declaration needed
FATCA applies to citizens, residents, and non-resident aliens of the US. Its purpose is to prevent tax evasion and avoid double taxation by ensuring transparent reporting of overseas assets.
The FATCA declaration for NPS is part of a broader compliance framework that covers multiple income sources and investments, including:
Mutual funds
Fixed deposits
NPS
Equities
Bank interest
PPF
Capital gains
Assets such as jewellery, automobiles, and household goods are generally excluded from FATCA reporting.
Since 2015, the Indian government has mandated FATCA self-certification for US-based NRIs earning income from Indian investments. Without this declaration, financial institutions may restrict or block accounts, including NPS.
Choosing compliant, low-maintenance investments like Bajaj Finance FD can help reduce administrative complexity for NRIs. Book FD.
