FATCA Declaration is a mandatory self-declaration submitted by NRIs to Indian financial institutions to confirm their tax residency and whether they have any U.S. tax connection. It helps banks and investment platforms comply with international tax reporting rules and avoid tax evasion.
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FATCA Full Form: Foreign Account Tax Compliance Act.
Purpose of FATCA: It is a U.S. tax law enacted in 2010 under the HIRE Act. It aims to stop tax evasion by U.S. persons who hold money and assets abroad. It makes them and financial institutions report those accounts to the IRS (Internal Revenue Service).
India–U.S. Agreement (IGA)
India signed an Inter‑Governmental Agreement (IGA) with the U.S. in 2015. Because of this agreement:
Indian banks and financial institutions collect FATCA details
Information is reported to the Indian tax authorities
Relevant data is shared with the U.S. Internal Revenue Service (IRS)
This is why FATCA compliance is compulsory in India, especially for NRIs.
What Is a FATCA Declaration?
A FATCA declaration is basically a simple form that allows you, as an NRI, to tell your Indian bank, insurer, mutual fund, or NPS provider about your tax home and whether you count as a U.S. person. This helps them report your account details if needed under U.S. tax rules.
A FATCA Declaration helps confirm your:
Tax residency
U.S. person status (Yes or No)
Country‑wise Tax Identification Number (TIN)
Based on this declaration, the financial institution decides whether your account details must be reported under FATCA.
For NRIs, this declaration is required both at the time of investment and periodically thereafter.
Why FATCA Is Important for NRIs
FATCA is important for NRIs for the following reasons:
Mandatory for account continuation: Non‑submission can lead to account freeze or restrictions.
Global tax transparency: Helps tax authorities track cross‑border investments.
Smooth repatriation: FATCA‑compliant accounts face fewer repatriation hurdles.
Who Needs to Submit a FATCA Declaration?
FATCA applies to:
U.S. citizens (even if residing in India)
Green Card holders
NRIs meeting U.S. substantial presence test
NRIs asked to confirm non‑U.S. status
IMPORTANT:
Even if you are not a U.S. person, you must declare that fact formally when requested.
If a financial institution asks for FATCA details, submission is compulsory.
How NRIs Can Submit or Update FATCA Declaration in 2025?
The financial institutions support digital FATCA submission through the following:
Online banking portals
Mutual fund KYC platforms
NPS CRA login
Insurance company dashboards
How an NRI Can Get a FATCA Certificate in 2025?
Step 1: Log in to your bank, mutual fund, insurance, or NPS account portal where FATCA is requested.
Step 2: Choose the FATCA or FATCA-CRS self-certification option from the compliance or profile section.
Step 3: Provide your current country of tax residence and citizenship information.
Step 4: Select Yes or No for U.S. tax residency or U.S. person status.
Step 5: Enter your overseas TIN (such as SSN, ITIN, or local tax number, if applicable).
Step 6: Carefully review the information and confirm that the details provided are correct.
Step 7: Submit the FATCA declaration online. In most cases, confirmation is instant.
What Happens If the FATCA Declaration Is Not Submitted?
For NRIs, consequences are practical rather than penal:
Account restrictions or freeze
No new investments allowed
Delay or rejection of transactions
Compliance follow‑ups from banks and fund houses
For U.S. persons, non‑reporting can also attract penalties under U.S. tax laws.
Penalties Linked to FATCA (U.S. Perspective)
Situation
Possible Impact
Non‑reporting of foreign assets
Heavy monetary penalties
Continued non‑compliance
Higher cumulative fines
Institutional non‑compliance
30% withholding on U.S.‑source income
While Indian NRIs are not fined directly under Indian law, access to financial services can be limited until FATCA is completed.
Quick Difference Between FATCA vs CRS
Most Indian institutions collect FATCA and CRS details in one form.
Aspect
FATCA
CRS
Full Form
Foreign Account Tax Compliance Act
Common Reporting Standard
Who it covers
Only U.S. persons
Tax residents of many countries
Main purpose
Reporting to U.S. tax authorities
Sharing tax information globally
When it applies to NRIs
When the NRI has a U.S. tax link
When the NRI is a tax resident outside India
NOTE: Most NRIs submit FATCA and CRS together.
Information Required in a FATCA Declaration
When an NRI submits a FATCA declaration, the following details are usually asked:
Country of tax residence
Tax Identification Number (TIN) or equivalent
Citizenship
U.S. person confirmation
Overseas address and contact details
Self‑certification and signature
If any of these details change later, the declaration must be updated.
FATCA Declaration for NPS
The National Pension System (NPS) requires FATCA compliance for both resident and NRI subscribers through the CRA (Protean) portal.
If FATCA is not completed, the following scenarios are possible for your NPS account:
Contributions may be blocked
Withdrawals may be delayed
The account may be marked non-compliant
FATCA for Insurance Policies and Mutual Funds
NRIs investing in the following investment plans must submit FATCA details at the time of purchase:
Non‑submission of the FATCA declaration may lead to delays in premium processing or claim settlements.
Conclusion
For NRIs, the FATCA declaration is a basic compliance step. It ensures smooth banking, uninterrupted investments, and easy repatriation. Submitting FATCA on time avoids account restrictions and keeps your Indian finances fully compliant in 2025.
FAQs
What is the FATCA declaration for NRIs?
FATCA declaration for NRIs is a self-certification confirming tax residency and U.S. tax status.
What Details Are Required in the FATCA Declaration?
NRIs usually need to provide:
Country of tax residence
Tax Identification Number (TIN)
Citizenship status
Confirmation of U.S. person status
Overseas address and contact details
Self-certification and signature
What Happens If NRIs Do Not Submit FATCA?
If the FATCA declaration is not submitted:
Bank or investment accounts can be restricted
New investments may not be allowed
Transactions may be put on hold
Repatriation may become difficult
Is FATCA mandatory for NRIs?
Yes, FATCA is mandatory if requested by banks, insurers, mutual funds, or NPS.
Do NRIs without U.S. ties need to comply with FATCA?
Yes, NRIs must declare they are not U.S. persons when asked.
Is FATCA required every year?
FATCA is typically a one-time requirement, but it must be updated if your tax status changes.
Can NRIs submit FATCA online?
Yes, most institutions will allow fully online FATCA submission in 2025.
˜The insurers/plans mentioned are arranged in order of highest to lowest first year premium (sum of individual single premium and individual non-single premium) offered by Policybazaar’s insurer partners offering life insurance investment plans on our platform, as per ‘first year premium of life insurers as at 31.03.2025 report’ published by IRDAI. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the IRDAI website www.irdai.gov.in *Past 10 Year annualised returns as on 01-12-2025 *All savings plans are provided by the insurer as per the IRDAI approved insurance plan.
Tax benefit is subject to changes in tax laws. Standard T&C Apply
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs. **Returns are based on past 10 years' fund performance data (Fund Data Source: Value Research).
^Returns as on 10th Jan'25. 18% returns for Tata AIA Life Top 200 for the last 10 years.The past performance is not necessarily indicative of future performance. Source: Morningstar
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