(GS2/GS3-money laundering) Discuss in brief, the salient features and benefits of Indo-US FATCA agreement (200 words)
- 2010: American Congress enacted Foreign Account Tax compliance Act (FATCA) to keep a tab on American citizens and companies investing abroad to evade taxes.
- To implement this Act, US Government signs inter-governmental agreement (IGA) with the other countries, to get information about American investors.
- 2014, April: India and USA signed an FATCA-IGA agreement.
- Will come in effect from 1st July 2014.
- All Indian Financial intermediaries (Banks, mutual funds, insurance cos etc.) will have to keep record of American investors- not just US citizens but even US green card holders and US residents.
- These American investors will be classified in three categories:
|Less than $50,000||Exempted from reporting|
|Between $50,000- $1 million||India will share their information to USA’s IRS (internal revenue service) through CBDT (Central Board of Direct Taxes).|
|Above $1 million|
- Exempted: Accounts of US government entities, US Federal reserve and retirement funds.
- For Noncompliance, Indian FI will have to pay 30% of the withholding tax to USA.
FATCA: Side notes
|Desi Financial institutions (banks, Mutual funds etc) will sent report to their Government (CBDT)=> matter forwarded to=> American IRS||Desi FI will directly send info to American IRS tax department|
|India has signed this type of agreement with USA||—|
(Interview Q.) What is H1B Visa? How is it different from Green card? Why has USA planning to give work permit to spouses of H1B?
What is H1B visa?
- Non-immigrant visa Granted to skilled professionals
- Employer must be American
- Specialty occupation, related to field of study (graduation).
- Minimum wages according to US laws.
How is it different from Green Card?
- Green card holder = permanent “RESIDENT” of USA. (Not Citizen.) He can apply for Citizenship.
- Indian Professionals usually have following dream: H1B visa => Green Card => Permanent citizenship.
- But the lust for H1B declined in the recent times because:
- Too long waiting period before green card (Because there are specific quotas.)
- Subprime crisis => Salaries down, even jobs lost.
- And their spouses face problem another problem.
- They don’t get H1B visa. Unless they get degree related job from American employer.
- They get H4 Visa. With H4 visa you can get driving license and bank account but not work permit in USA.
- In most cases, Indian-Chinese-Philippines Husband has H1B visa, wife is H4 stay at home=> social isolation, family tension, money problem, domestic abuse and suicides.
As a result, International migrant skilled professionals are preferring other countries over USA, where both husband and wife can get work permits without hassles. Google, Facebook and other giants demanding reforms in American system.
US Immigration Bill 2013
- Aims to fix this problem by granting work permits even to the spouses of such H1B holders.
- That way both husband + wife can work, less money problem, less family tension, can afford to wait n watch for green card.
- It’ll help American companies attract & retain highly skilled foreign workers.
- Upper house (Senate) passed this bill
- But stuck in Lower house (House of Representatives), Republican Party opposed.
So, in the meantime, President Obama aims temporary solution via department of homeland security. How?
- @Those already with H1B visa and applied for Green card
- Their H4 visa spouses can apply to Dept. of Homeland security to get work permit.
Even above rule is not yet implemented. Department of Homeland security only “proposed” this rule on website, to seek public comments.
Impact on India?
|Obama’s temporary solution||US Congress’s Immigration reform bill|
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