SEBI Updates FATCA and CRS Reporting Requirements
SEBI Updates FATCA and CRS Reporting Requirements Under the Income-tax Act, 2025 and Income-tax Rules, 2026
The Securities and Exchange Board of India (SEBI) has issued revised directions to its registered intermediaries concerning reporting obligations and due diligence procedures under the Foreign Account Tax Compliance Act (FATCA) and Common Reporting Standard (CRS), in line with the provisions of the Income-tax Act, 2025 and Income-tax Rules, 2026.
1. Background and Regulatory Framework
SEBI had earlier issued Circulars dated August 26, 2015, September 10, 2015, and February 20, 2024, prescribing FATCA and CRS-related reporting and due diligence requirements for intermediaries registered with the Board.
These requirements were originally governed by Section 285BA of the Income-tax Act, 1961, read with Rules 114F to 114H and Form 61B of the Income-tax Rules, 1962.
Following the introduction of the new income-tax framework with effect from April 1, 2026, the relevant provisions have been revised. The reporting framework for Automatic Exchange of Information (AEOI) is now governed by Section 508 of the Income-tax Act, 2025, read with Rules 238, 239 and 240 and Form 166 of the Income-tax Rules, 2026.
2. Regulatory Directions to SEBI-Registered Intermediaries
Under Rule 239(12)(a) of the Income-tax Rules, 2026, the concerned regulator is required to issue appropriate directions to regulated financial institutions. These directions must facilitate implementation of the prescribed reporting and due diligence procedures, maintenance of account-related information and its availability for fulfilling statutory reporting obligations.
Accordingly, SEBI has directed all registered intermediaries falling within the definition of Reporting Financial Institutions (RFIs) to take appropriate measures to ensure compliance with Rules 238 to 240 of the Income-tax Rules, 2026.
The applicability of these requirements depends on whether an entity qualifies as a Financial Institution and a Reporting Financial Institution under Rule 238.
3. Mandatory Changes in Compliance and Reporting Systems
Intermediaries classified as RFIs are required to integrate the revised AEOI reporting and due diligence requirements into their customer onboarding and Know Your Customer (KYC) processes.
In particular, they must review and modify the following systems and procedures:
a. Self-Certification Procedures: Update the process for collecting customer self-certifications to incorporate the prescribed validity indicator.
b. Identification of Controlling Persons: Enhance identification mechanisms to record the relevant capacity of controlling persons, including settlor, trustee, protector, beneficiary or other applicable roles.
c. Account Classification: Modify account classification systems to capture the account category and distinguish between pre-existing and newly opened accounts.
d. Form 166 XML Reporting: Upgrade the XML generation software to incorporate all newly prescribed mandatory data fields. Missing information may lead to validation errors when reporting data is uploaded to the Income-tax portal.
4. Uploading FATCA and CRS Certifications
SEBI has directed registered intermediaries to upload the FATCA and CRS certifications collected from their clients onto the systems maintained by KYC Registration Agencies (KRAs).
The responsibility for obtaining the necessary certifications, reporting the prescribed information and ensuring compliance with the applicable FATCA and CRS requirements rests entirely with the respective intermediaries.
5. Reference Documents and Guidance
Intermediaries are advised to refer to the following documents for understanding and implementing the revised requirements:
- Income-tax Rules, 2026: Available on the Income Tax Department’s official website: https://www.incometaxindia.gov.in/income-tax-rule-2026
- CBDT Guidance Note on FATCA and CRS: The Guidance Note dated July 24, 2026, containing detailed instructions and FAQs for Reporting Financial Institutions, is available at: https://www.incometaxindia.gov.in/documents/d/guest/e-book-crs-and-fatca-guidance-note-faqs-pdf
6. Statutory Authority and Availability of Circular
The circular has been issued under Section 11(1) of Chapter IV of the SEBI Act, 1992, read with Rule 239(12)(a) of the Income-tax Rules, 2026.
The objective is to safeguard investor interests and ensure the orderly development and regulation of the securities market.
Also Read: SFT – 2517: Depository Transaction Reporting, Due Dates & Key Guidelines
Also Read: “CBDT Notifies New Forms PAN CR-01 & PAN CR-02 for PAN Correction from 1 April 2026”
Also Read: FAQs and Guidance notes on Forms under Income-tax Rules, 2026
Read More: Union Budget 2026 – CA Cult
