The Income Tax Department on Tuesday directed financial institutions to block accounts opened by US taxpayers in India between July 2014 and August 2015 unless they are self-certified by April 30. In a notification, the Central Board of Direct Taxes said this was to ensure compliance with the United States’ Foreign Account Tax Compliance Act, which makes certain that investors from the US pay tax on their income from assets abroad.

Self-certification includes providing details such as country of tax residence, tax identification number from the country, country of birth, country of citizenship, etc.

India had signed a deal with the US to bring FATCA into effect from August 31, 2015. As per this law, financial institutions in India – mutual funds, insurance companies, brokerages, banks and hedge funds – need to submit details of the accounts of US taxpayers’ with investments/assets in the country to the CBDT, which in turn passes the information on to the Internal Revenue Service of the US.

US taxpayers include citizens of the US, residents (green card-holders) as well as non-residents who have financial accounts abroad or other offshore wealth. The inter-government agreement signed between India and the US to implement FATCA in India allows the countries to exchange financial data between them.

By blocking the accounts, “financial institutions will prohibit account-holders from effecting any transaction with respect to such accounts”, the CBDT said. However, transactions will be allowed once the accounts are self-certified and verified.

For those who had opened accounts with financial institutions between July 2014 and August 2015, the CBDT had earlier set an August 31, 2016, deadline to self-certify them. But the tax department had later extended the deadline indefinitely, given the “difficulties faced by stakeholders”.