The Securities and Exchange Board of India (SEBI) has directed registered intermediaries that qualify as Reporting Financial Institutions (RFIs) to align their Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS) compliance with revised tax requirements. Intermediaries must incorporate reporting and due diligence into customer onboarding and Know Your Customer (KYC) frameworks and maintain the information needed to meet their obligations. The instructions follow the replacement of the previous tax framework by the Income Tax Act, 2025 and Income Tax Rules, 2026, effective April 1, 2026.
The required updates include self-certification collection procedures that capture the validity indicator and systems that record controlling persons’ roles. Account classification systems must capture account type and distinguish between preexisting and new accounts. Form 166 XML generation software must include all new mandatory fields, as missing fields will cause validation errors on the Income Tax portal. RFIs must comply with Rules 238 to 240 and are advised to refer to the Central Board of Direct Taxes’ FATCA and CRS guidance.
Intermediaries must also upload FATCA and CRS certifications obtained from clients to KYC Registration Agencies’ systems. Responsibility for obtaining and reporting those certifications, and for related compliance, remains solely with the respective intermediary.