Clarification in respect of Rule 114F(5) of the Income Tax Rules, 1962

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....orting Financial Institutions (RFIs) in respect of reportable accounts. A comprehensive Guidance Note was issued on 31.08.2015 to provide guidance to the RFIs, regulators and officers of the Income Tax Department. This was updated on 31.12.2015, 31.05.2016 and 30.11.2016. 3. In addition to the guidance and clarifications already issued in this regard, the CBDT, in exercise of its powers under section 119 of the Income-tax Act, 1961, hereby issues the following clarification as a partial modification to the Guidance Note dated 30.11.2016, for the removal of doubts with respect to reporting of accounts other than U.S. reportable accounts. Treaty Qualified Retirement Fund 4. The definition of Treaty Qualified Retirement Fund has been provi....

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.... of this, it is clarified that a Treaty Qualified Retirement Fund shall not be treated as a non-reporting financial institution for the purposes of maintaining and reporting information in respect of any reportable account other than a U.S. reportable account defined in clause (11) of Rule 114F of the Rules. Non-public fund of the armed forces 9. A non-public fund of the armed forces is a non-reporting financial institution under sub-clause (c) of clause (5) of Rule 114F of the Rules. As per clause H of the Explanation to clause (5) of Rule 114F, "a non-public fund of the armed forces means a fund established in India as a regimental fund or non-public fund by the armed forces of the Union of India for the welfare of the current and forme....

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....d qualifies as a Non-Reporting Indian Financial Institution and as an exempt beneficial owner for the purposes of section 1471 and 1472 of the U.S. Internal Revenue Code. However, gratuity funds are not explicitly mentioned as Non-Reporting Financial Institution under the CRS. 15. In view of this, the following is clarified for the purpose of reporting under the CRS in respect of accounts other than U.S. reportable accounts: a. Gratuity funds which are only managed by either individual(s) and/or entity(ies) that is not a financial institution, are not capable of being classified as a managed Investment Entity under sub-clause (c) (B) of the Explanation to clause (3) of Rule 114F of the Rules. Hence, such gratuity funds will qualify as a ....