India Income Tax Department Flags Reporting Defects in FATCA and CRS Compliance

India’s Income Tax Department has flagged missing, incorrectly formatted and mismatched tax identification numbers in reports filed under FATCA and CRS, two systems for exchanging financial-account information across borders.

Debjyoti Das, Principal Director General of Income Tax (Intelligence & Criminal Investigation), discussed the defects at a Mumbai financial-sector outreach event. His remarks were reported on November 5, 2026. They describe problems in existing reporting, not a dated change to the rules.

The issues involve account holders’ tax identification numbers, or TINs. Some reports omit a number, use a format that is wrong, or give a number that does not match the customer’s details. A smaller share of errors concerns dates of birth.

The reporting duty falls on Indian financial institutions. Their reports cover accounts held in India by people who are tax residents of other jurisdictions, not Indian residents’ investments abroad. Banks, mutual funds and insurers took part in the department’s outreach.

• Form 166 replaced Form 61B from April 1, 2026.
• Annual reportable-account statements are due by May 31.
• Training is planned in Mumbai, Delhi, Kochi and Bengaluru.

Das says weak onboarding and stale customer records feed reporting errors

Das linked errors to incomplete information gathered when customers open accounts and to customers who move overseas but leave their Know Your Customer records unchanged. He also pointed to growing reporting volumes as more foreign residents invest in India.

“The data collection point makes all the difference. If you don't have a robust data collection mechanism, reporting automatically suffers,” Das said. Relationship managers and account-opening staff are central to collecting accurate details, he said.

The share of defective reports has fallen over time, Das said, even as the number of reports has grown. He did not characterize the TIN-related share as the proportion of all submissions containing errors. The figure refers to the types of defects within reports already identified as defective.

Indian institutions report accounts held by residents of other jurisdictions

Under the exchange framework, a financial institution collects account information and sends it to Indian tax authorities, which transmit it to partner jurisdictions. The CBDT’s automatic exchange of information page describes India’s information-exchange commitments.

For accounts reported under the Common Reporting Standard, the customer’s TIN generally comes from the country where that customer is tax-resident. It may not be a PAN issued in India. The customer provides the information through self-certification, and staff enter it into institutional records.

The compliance problem can begin at account opening, well before the reporting file is prepared.

The department favors correction before penalties, while warning of wider consequences

Das warned that unresolved reporting failures could harm India’s sovereign credit rating. He also said non-compliant institutions with US clients could face punitive withholding taxes under the US-linked rules.

“It can have certain adverse consequences if we do not address them on time or completely. We can end up with a downward rating for the country,” Das said.

The department says it will expand training for relationship managers and account-opening personnel. Das also described a preference for cooperation and correction, with penalties reserved mainly for deliberate defaults; he said penalties are generally not imposed for technical defaults. The department plans to consult financial regulators, including SEBI and the RBI, on account-opening procedures and aligning KYC requirements with international tax reporting standards. The remarks do not describe an immediate penalty campaign.

Crypto reporting and overseas-asset disclosures follow separate tracks

A separate international reporting development concerns crypto-asset transactions, which are expected to enter the automatic exchange framework in 2027. That is a coming expansion, not one of the TIN defects Das identified in current account reports.

The department’s Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026, addresses a different direction of information flow. Taxpayers can view certain data received from foreign jurisdictions on the e-filing portal, including asset information for 2022 to 2024. The scheme closes on December 31, 2026.

Those foreign records are information India receives about assets abroad. Das’s remarks concerned financial institutions in India sending account information about foreign tax residents to other jurisdictions.

Institutions can start by checking onboarding and residency records

The department’s stated response points to better collection and updates when a customer’s tax residence changes. The revised guidance also describes checking a foreign TIN against the format used by the declared jurisdiction; that check alone does not confirm the number belongs to the customer.

• Capture the customer’s tax-residency details when opening an account.
• Review records when an account holder’s tax residence changes.
• Check the entered foreign TIN against the declared jurisdiction’s format.
• Keep the May 31 annual statement deadline in the filing calendar.

This article is for informational purposes only and does not constitute tax advice. Consult a qualified tax professional or CPA about your specific situation.