Investors in mutual funds again have to go through
the painful exercise of filling another form known as Fatca. We have seen
frequent changes in KYC and application forms in recent past and there is no
end to it. Surprisingly nobody is bothered what happens at the ground level.
Mutual fund investment, according to me, is one of the best investment avenue
in India compared to insurance, fixed deposits and other financial assets. I
think role of the all the stake holders should be to encourage people to invest
through mutual fund but looking at the present situation neither SEBI nor AMFI looks
interested in expanding the roots of the
industry. Even distributors are helpless as there is nobody who can listen to
their problems.
India and US have signed bilateral agreement to
implement FATCA (Foreign Account Tax and Compliance Act) wherein we have agreed
to share the details of American investors details to the US Government. US
Government is making changes to its tax laws so that any US citizen investing
outside US doesn’t escape US taxes. After the implementation of the Act it will
be mandatory for the Indian government to share investment and assets details
to the US government. SEBI has implemented this for all the countries so that foreigner’s
investments are easily traced. I don’t deny the importance of the bilateral
agreement between the countries as we are also seeking details of foreign bank
account holders with the other countries. The problem is the way it is implemented
which is really going to increase the paper work for Indian investors which
will not serve the purpose.
Surprisingly FATCA is immediately applicable only to
mutual fund investment and not to any other investments like Insurance, Fixed
deposits or postal deposits which is again highly objectionable. I would like
to know is the agreement is signed only to share mutual fund investment or
nobody wants to go beyond this. FATCA is
effective from 1st November’ 2015 for mutual fund investors.
The other point is FATCA agreement was signed in
July’2014 and it is implemented from November’2015 means no home work is done
in last 15 months. It just like “Upper Se Order Aya hai, karna padega” without
asking any question. According to me this details requires to be given by NRIs only
who have invested in India and not by all the investor’s. The NRI investors in
total will be less than 5% of the total, means 95% of the data of Indian investors
is not relevant but still we are doing this unwanted exercise.
Investors should know that they have to do the FATCA
with all AMCs for each folio. CAMS and KARVY have come out with PAN based
online filling of FATCA form which will update details in all the fund houses
they manage. But for other fund houses they have to contact them separately. This
is really going to painful as average investor invests at least in 3-4 AMCs.
According to me this is one time exercise and should have been included in KYC form
wherein investors have to fill only one additional form. We are also hearing
common KYC across financial assets but still that is also not happening.
In last few years we have seen many changes in the
procedures and forms in mutual fund and tones of old forms have gone to
wastage. Who is responsible for this? I hope SEBI will relook at it and
implement it for NRIs only and make it part of KYC details. I don’t want to
comment much on the role of AMFI but to me it’s silent spectator and needs to
be dissolved if they can’t speak out in the interest of distributors and
investors.
This article first appeared at indianotes.com
http://www.indianotes.com/Finance-How-to/FATCA--A-blow-to-Indian-MF-Investors/199082/2/T
