Indian bank accounts, demat accounts and mutual fund folios opened in the past decade carry a short page on which the client states their country of birth, citizenship and tax residence. That page is the FATCA declaration. The rules behind it were restated on 24 July 2026, when the CBDT issued a revised guidance note on FATCA and the Common Reporting Standard. According to a TaxGuru report of the note, the reporting duty now sits in section 508 of the Income-tax Act, 2025 and Rules 238 to 240 of the Income-tax Rules, 2026. The annual statement is Form 166, which replaced Form 61B.
The note is addressed to banks, but it matters to advisors when a client invests in the US. The client then signs a US form, the W-8BEN, which makes the same statement about citizenship and residence to a US payer. The two documents must tell the same story. The bank that sends the money abroad, and that collects tax at source on it as the guide to TCS on foreign remittance explains, usually holds the Indian declaration already. Before a client invests, the advisor should check for any link that makes the client a US person for tax. Such a client cannot use the non-US forms at all.
What a FATCA declaration records under the 2026 Rules
The Income-tax Rules, 2026, in force from 1 April 2026, set out the duty. Rule 240(4) requires a reporting financial institution to obtain a self-certification when a new individual account is opened. It must show every country where the client is resident for tax, and the institution must test it for reasonableness against what it learned at account opening, including KYC documents.
If the client is resident outside India, the self-certification must also give the foreign tax identification number and date of birth. If a later change of circumstances makes the declaration unreliable, the institution must obtain a fresh one. Failing that, it treats the account as reportable for each country where it has found an indicium. Rule 238 defines a US person to include an individual who is a citizen or resident of the US.
India's FATCA agreement with the US is a Model 1 agreement, in force since 31 August 2015, according to the US Treasury's list of intergovernmental agreements. Under that model, the IRS explains, local institutions report US accounts to their own government, which passes the data to the IRS. CRS self-certification works the same way for other countries, so a FATCA CRS declaration is one form serving both regimes.
The W-8BEN makes the same statement to a US payer
When an Indian client invests in a US deal, the US payer asks for Form W-8BEN, a certificate of foreign status. The IRS instructions for Form W-8BEN say that a US citizen must not use it, even one who lives outside the US. Nor may a resident alien, which includes a holder of a US green card. Such clients give Form W-9 instead.
A green card does not lapse simply because its holder lives in India. The IRS page on the green card test says the holder remains a US resident for tax unless the status is abandoned in writing to USCIS or ended by USCIS or a federal court. US citizens and resident aliens living abroad are also taxed on worldwide income, according to the IRS page for taxpayers abroad.
The W-8BEN also has its own timetable. A change in circumstances that makes it incorrect requires the client to tell the payer within 30 days and give a new form. A move to the US, or a new US address used to certify foreign status, is such a change.
US indicia an advisor should look for before a client invests
US indicia are facts in a client's records that point to the US. On the Indian side, Rule 240(3) lists the indicia an institution searches for in older, lower value accounts. They include an unambiguous US place of birth, a mailing or residence address outside India and telephone numbers outside India with none in India. Standing instructions to pay funds abroad, and a power of attorney given to someone with a foreign address, also count.
The US side runs a parallel test. Under Treasury Regulation section 1.1441-7, a payer has reason to doubt a W-8BEN that comes with a US address, a US telephone number and no foreign one, or an unambiguous US place of birth. For a US birthplace, the payer generally needs evidence of another citizenship, plus a certificate of loss of US nationality or a reasonable written explanation of why the client is not a US citizen.
In practice, five questions cover these indicia. The advisor should ask whether the client was born in the US and whether the client holds or has ever held a green card. The others concern US passports held now or in the past, US addresses or telephone numbers on any account, and standing instructions or powers of attorney that point to the US. A yes does not settle the client's status, but it calls for documents and a word with the client's CA.
When the Indian declaration and the US form disagree
A client born in the US to Indian parents may have declared a US birthplace to a fund house years ago and then sign a W-8BEN that names only Indian citizenship. A client who returned from the US may still hold a green card that was never formally given up. In both cases the Indian institution may treat the account as US reportable, while the US payer treats the client as foreign. Because the Indian data reaches the IRS under the Model 1 agreement, the IRS could end up holding two records about the same person that disagree.
The consequences fall on the client. A payer that learns of an unresolved indicium can no longer rely on the W-8BEN, so payments may be delayed and documents demanded. A client who turns out to be a US person may have US filing obligations for past years. Securities law draws its own line, because Regulation S defines a US person by residence, not citizenship. The securities question and the tax question are therefore separate, and both need answers.
What advisors should do before a client signs
The first step is to ask banks and fund houses for copies of the FATCA self-certification they hold, and to compare each with the facts the client gives today. The second is the five questions above, with the answers and any documents kept on file. The third is to settle any indicium before the W-8BEN is signed, with a non-US passport, a certificate of loss of nationality or proof that a green card was abandoned. The last is a standing instruction to the client to report any move, new address or change of citizenship within the 30 days the US form allows.
Correct paperwork does not protect the investment itself. Clients can still lose capital, property values can fall, distributions may not be paid and the interest is illiquid. Rupee movements also change its value.
Raveum offers eligible clients US real estate. Indian clients invest through a US corporation, a blocker, that holds the property interest, and they typically receive Form 1042-S. Raveum handles KYC, agreements and US tax forms, while the client's Indian tax position stays with the client and their CA. Advisors can see how introductions work on Raveum's partner page. The guide to US commercial real estate for advisors explains the blocker structure in more detail.
The CBDT's guidance note was written for banks, but its message reaches every client who invests abroad. What an Indian institution collects at account opening flows to the IRS, alongside what a US payer reports on the same client. A client whose FATCA declaration and W-8BEN agree has nothing to explain. One whose records disagree should find out before investing, and the advisor is best placed to spot it. The explainer on Form 168 shows how foreign account data can surface in the client's annual statement, and the guide to TCS on foreign remittance covers the remittance itself.
Frequently Asked Questions
What is a FATCA declaration?
A FATCA declaration is the self-certification a client gives an Indian bank, depository or fund house about their country of birth, citizenship and tax residence. Under Rule 240 of the Income-tax Rules, 2026, institutions must obtain it when a new account is opened and test it for reasonableness. They use it to decide which accounts to report.
What is the difference between FATCA and CRS self-certification?
FATCA is a US law that requires foreign institutions to report accounts of US persons, which India implements through a Model 1 agreement with the US. The Common Reporting Standard is the OECD system for exchanging account data among many countries. Indian institutions usually collect both on one combined FATCA CRS declaration.
Is FATCA self-certification mandatory for every new account in India?
For new individual accounts it generally is. Rule 240(4) requires the institution to obtain a self-certification at account opening that establishes the client's tax residence. Some low-value depository accounts and insurance contracts need not be reviewed for US reporting unless balances exceed the equivalent of USD 50,000 at the end of a calendar year.
What are US indicia in a FATCA review?
US indicia are facts suggesting a client may be a US person. They include a US place of birth, a US address or telephone number, standing instructions to pay a US account and a power of attorney held by someone with a US address. Each must be cleared with documents or an explanation first.
Can a green card holder living in India sign Form W-8BEN?
Generally no. A green card holder is a resident alien for US tax under the green card test and must give Form W-9 instead. The IRS treats the holder as a US resident until the status is abandoned in writing to USCIS or ended by USCIS or a federal court, even while living in India.
What happens if a client's FATCA declaration and W-8BEN do not match?
The Indian institution may report the client as a US person while the US payer treats the client as foreign. A payer with an unresolved indicium cannot rely on the W-8BEN, so payments can be delayed. A client who is a US person may face past US filing obligations, quite apart from the investment's own risks.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
