Income tax department made 11th amendment in the income tax rules with a notification no. 62/2015 dated 7 August 2015 and issued a new form 61B income tax form. Full notification and new form 61B are as under.
In exercise of the powers conferred by section 285BA read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Government with respect to registration of persons, due diligence and maintenance of information, and the Board for matters relating to statement of reportable accounts, hereby make the following rules further to amend the Income-tax Rules, 1962, namely:-
1. (1) These rules may be called the Income–tax (11th Amendment) Rules, 2015.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), after rule 114E, the following rules shall be inserted, namely:-
‘114F Definitions.- For the purpose of this rule and rules 114G and 114H,-
(1) “financial account” means an account (other than an excluded account) maintained by a financial institution, and includes-
(i) a depository account;
(ii) a custodial account;
(iii) in the case of an investment entity, any equity or debt interest in the financial institution.
Explanation.- For the purposes of this sub-clause “financial account” shall not include any equity interest or debt interest in an entity that is an investment entity solely because it,-
(a) renders investment advice to, and acts on behalf of; or
(b) manages portfolios for, and acts on behalf of,
a customer for the purpose of investing, managing, or administering financial assets deposited in the name of the customer with a financial institution that is not a non-participating financial institution other than such entity;
(iv) in the case of a financial institution not described in sub-clause (iii), any equity or debt interest in the financial institution, if the class of interests was established with a purpose of avoiding reporting in accordance with rule 114G and, in case of a U.S. reportable account, if the value of the debt or equity interest is determined, directly or indirectly, primarily by reference to assets that give rise to U.S. source withholdable payments; and
(v) any cash value insurance contract and any annuity contract issued or maintained by a financial institution, other than a non-investment-linked, non-transferable immediate life annuity that is issued to an individual and monetises a pension or disability benefit provided under an account that is an excluded account.
Explanation.- For the purposes of this clause,-
(a) “depository account” includes any commercial, checking, savings, time, or thrift account, or an account that is evidenced by a certificate of deposit, thrift certificate, investment certificate, certificate of indebtedness, or other similar instrument maintained by a financial institution in the ordinary course of a banking or similar business and also an amount held by an insurance company
pursuant to a guaranteed investment contract or similar agreement to pay or credit interest thereon;
(b) “custodial account” means an account (other than an insurance contract or annuity contract) for the benefit of another person that holds one or more financial assets;
(c) “equity interest” in a financial institution, being-
(i) a partnership firm, means either a capital or profits interest in the partnership firm;
(ii) a trust, means any interest held by any person treated as a settlor or beneficiary of all or a portion of the trust, or any other natural person exercising ultimate effective control over the trust;
Explanation.- A person will be treated as a beneficiary of a trust if he has the right to receive directly or indirectly a mandatory distribution or may receive, directly or indirectly, a discretionary distribution from the trust.
(d) “insurance contract” means a contract (other than an annuity contract) under which the issuer agrees to pay an amount upon the occurrence of a specified contingency involving mortality, morbidity, accident, liability, or property risk;
(e) “annuity contract” means a contract under which the issuer agrees to make payments for a period of time determined in whole or in part by reference to the life expectancy of one or more individuals;
(f) “cash value insurance contract” means an insurance contract (other than an indemnity reinsurance contract between two insurance companies) that has a cash value and in case of a U.S. reportable account such value is greater than an amount equivalent to fifty thousand U.S. dollars.
Explanation.- For the purposes of this clause, a single premium life insurance contract which does not permit an amount to be paid on surrender or termination of the contract and which does not allow amounts to be borrowed under or with regard to the contract, shall not constitute a cash value insurance contract;
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