Direct Tax Laws & International Taxation · Latest Developments in International Taxation

Exchange of Information, FATCA and CRS (CA Final Direct Tax)

Updated 5 October 2026

Automatic exchange of information means tax authorities share financial account data on foreign residents every year without being asked. FATCA covers US persons; CRS covers residents of other reportable countries. Indian reporting financial institutions identify such accounts and file a yearly statement, known as Form 61B. Solve questions by classifying the institution, the account holder and the jurisdiction.

Understand Exchange of Information, FATCA and CRS

Tax authorities cannot tax what they cannot see. A resident of one country may hold a bank account, shares or insurance in another country and not declare the income. Exchange of information (EOI) is how tax treaties and agreements fix this: one tax authority passes data to another.

EOI comes in three forms. On request: one country asks about a specific taxpayer. Spontaneous: a country shares information it finds useful for another. Automatic (AEOI): data on a whole class of accounts is sent routinely, every year, without any request. FATCA and CRS are both automatic exchange systems.

FATCA (Foreign Account Tax Compliance Act) is a US law. It aims to find US persons holding accounts outside the US. India signed an intergovernmental agreement (IGA) with the US under the Model 1 approach. Indian financial institutions report to the Indian tax authority, and India passes the data to the US. CRS (Common Reporting Standard) is the OECD/G20 global standard. It works like FATCA but is multilateral. It applies to account holders who are tax residents of any reportable jurisdiction, not just the US. India has committed to it through a multilateral competent authority agreement.

In India, the rules require a reporting financial institution (for example a bank, custodian, certain insurers and investment entities) to do due diligence on its accounts. It collects a self-certification from new account holders, searches records for pre-existing accounts, identifies reportable accounts, and files an annual statement of reportable accounts with the prescribed authority. This statement is commonly called Form 61B. Failing to register, keep records, or file is penalised.

Think of the chain in four links: identify the institution, identify the account holder's tax residence, decide which regime applies (FATCA or CRS), then report. Most exam questions test one of these links.

Key rules to remember

Three modes of EOI: On request | Spontaneous | Automatic; FATCA and CRS are automatic. Treaty exchange-of-information articles are the legal base for the other two.
FATCA trigger: Reportable account = financial account held by a specified US person (or a non-US entity with substantial US owners); Based on US citizenship or US tax status. Reporting goes India to IRS through the Indian tax authority under the IGA.
CRS trigger: Reportable account = financial account held by a tax resident of a reportable jurisdiction other than India (or an entity controlled by such persons); Based on tax residence in a participating country. It can cover several countries at once.
Due diligence threshold: FATCA, pre-existing individual account: US$50,000 or less = review not required if the institution applies the optional exemption; above US$50,000 up to US$1,000,000 = lower value; above US$1,000,000 = high value. CRS, pre-existing individual account: up to US$1,000,000 = lower value; above US$1,000,000 = high value; The balance is measured in US dollar equivalent. The US$50,000 exemption is an option, not automatic. It applies only to pre-existing individual accounts (not entity accounts), and the institution may choose to review these accounts anyway. Under FATCA, certain cash value insurance and annuity contracts of US$250,000 or less also need not be reviewed. Under CRS there is no de minimis exemption for individual accounts. Lower value accounts get an electronic record search only. High value accounts get enhanced review, including paper records and actual knowledge of the relationship manager. Cure documents for an indicium matter only if the review for that band actually finds the indicium.
New account rule: New account opened = self-certification obtained at opening; The institution must also check it for reasonableness against other information it holds. No balance threshold applies to new individual accounts.
Information reported: Name, address, tax identification number, date of birth, account number, account balance or value, income credited and sale or redemption proceeds; For entities that are passive non-financial entities, the controlling persons' details are also reported.
Filing: Annual statement of reportable accounts for each calendar year. It was filed in Form 61B under the Income-tax Rules, 1962 by 31 May of the following year.; The form number may differ under the rules made under the Income-tax Act, 2025. Check the current form and due date in the Income-tax Rules in force before the exam. Nil reporting is not a substitute for registration.

How to solve Exchange of Information, FATCA and CRS questions

Use the same sequence for any scenario question on exchange of information, FATCA or CRS. It stops you from mixing the two regimes.

1Identify the type of institution. Ask whether it is a reporting financial institution such as a bank, custodian, depository institution, specified insurer or investment entity. If not, there may be no reporting duty.
2Identify the account and its date of opening. Separate pre-existing accounts from new accounts, because the due diligence method differs.
3Identify the holder: individual or entity. For an entity, check whether it is a financial institution, an active NFE or a passive NFE. Passive NFEs trigger look-through to controlling persons.
4Establish tax residence and US status. Use self-certification for new accounts and record search for pre-existing ones. US citizenship points to FATCA. Residence in another reportable country points to CRS. For a pre-existing account, search only as deep as its value band requires: lower value accounts get an electronic record search only, and high value accounts get enhanced review. A US indicium, such as a US place of birth, matters only if it appears in the data that review searches. If it is found, self-certification alone does not clear it. The specified supporting documents are needed, or the account is treated as reportable.
5Apply the balance threshold for pre-existing individual accounts. Under FATCA, the institution may apply the optional exemption for accounts of US$50,000 or less (it is not automatic, and the institution can choose to review them). Above US$50,000 up to US$1,000,000 is lower value (electronic record search only), and above US$1,000,000 is high value with enhanced review. Under CRS, up to US$1,000,000 is lower value (electronic record search only, no de minimis exemption) and above it is high value. Convert the balance to its US dollar equivalent first.
6State what is reported and to whom. The institution files with the Indian authority, which then exchanges with the partner country automatically.
7Add the compliance consequence: registration, record keeping, annual statement, and penalty for default. Finish with a one-line conclusion.

Quickest way: Two-question test for FATCA or CRS

When to use it: Use this for short MCQs and for the opening line of any written answer when time is tight.

Ask: is the person a US citizen or US tax resident? If yes, FATCA applies.
Ask: is the person a tax resident of a reportable jurisdiction other than India? If yes, CRS applies. Both can apply together.
Ask: is the account held with a reporting financial institution? If no, there is no reporting duty on this institution.
For entities, ask: is it a passive NFE? If yes, report controlling persons as well.
If the review for the account's value band finds a US indicium such as a US place of birth in the searched records, remember that self-certification alone does not clear it. Without the specified documents, treat the account as reportable. Lower value accounts get an electronic record search only.
Close with the filing line: annual statement (Form 61B) to the Indian authority, which exchanges the data automatically.

Common mistakes in Exchange of Information, FATCA and CRS

Saying FATCA and CRS are the same thing.
Both use similar due diligence and the same type of reporting, so they look identical.
Fix: State the difference clearly: FATCA is US-specific and arises from a bilateral IGA; CRS is an OECD multilateral standard covering many countries and is based on tax residence.
Believing the Indian institution sends data directly to the IRS or the foreign tax authority.
Students think of the data as flowing straight to the destination country.
Fix: Write that the institution reports to the Indian tax authority, and India then exchanges the data with the partner jurisdiction automatically.
Treating FATCA as based on residence.
Residence is the main test in most tax topics.
Fix: FATCA focuses on US citizenship or US tax status. CRS focuses on tax residence.
Skipping the pre-existing versus new account distinction.
Students jump to reporting without checking how the account was opened.
Fix: New accounts need self-certification. Pre-existing accounts follow record-search rules. The US$1,000,000 threshold splits lower value from high value, and under FATCA the institution may apply the optional exemption for pre-existing individual accounts of US$50,000 or less.
Ignoring controlling persons of entity accounts.
The question names only the company, so students stop at the entity.
Fix: If the entity is a passive NFE, look through to its controlling persons and test their residence or US status.
Quoting section numbers or form details from memory.
Students carry over numbers from the older Act and rules.
Fix: Use the Income-tax Act, 2025 terms. If you are not sure of a number, describe the rule in words and name the statement as the annual statement of reportable accounts (Form 61B).

Worked examples

Example 1

An Indian bank holds a pre-existing individual account of Ms. Rao. On the specified date, the balance is the equivalent of US$1,200,000. The data the bank searches shows a US place of birth and a US phone number, with no non-US phone number on record, in addition to an Indian residential address. How should the bank treat the account?

Show the solution

The specified date is the date as of which the bank tests pre-existing accounts for the threshold (the balance date fixed by the rules, such as the last day of the relevant year). The account is pre-existing, so the review depends on its value on that date.
The threshold is measured in US dollars. A balance held in rupees must first be converted to its US dollar equivalent. Here the balance is already stated as US$1,200,000, so no further conversion is needed.
US$1,200,000 is more than US$1,000,000, so it is a high value account and needs enhanced review. The optional FATCA exemption for individual accounts of US$50,000 or less does not help, because the balance is far above it. A lower value account would get only an electronic record search.
Enhanced review means searching electronic records and also paper records, and considering the actual knowledge of the relationship manager. For a high value account the bank also tests for a current US mailing or residence address, a hold-mail instruction and a standing instruction to transfer funds to an account in the US. The facts mention none of these, so on the facts given the indicia found are the US place of birth and the US phone number. If the review had found any of the others, it would be a further indicium to clear. A US place of birth is an indicium only because it appears in the data the bank searches. If the bank's records did not hold it, it would not arise.
The US place of birth and the US phone number are US indicia. They do not prove US status, and each has its own cure. A US place of birth is cured only if the bank holds all three of these: a self-certification that Ms. Rao is neither a US citizen nor a US resident for tax purposes, a non-US passport or other government-issued ID, and either a Certificate of Loss of Nationality or a reasonable written explanation of why she has no certificate. The explanation covers why she does not have one despite renouncing US citizenship, or why she did not acquire US citizenship at birth. The US phone number is a separate indicium, because it is a US telephone number with no non-US telephone number on record. Its cure is a self-certification or documentary evidence of non-US status. The place-of-birth cure does not clear it, and the phone-number cure does not clear the place of birth.
Conclusion: this is a high value account needing enhanced review. If the bank obtains the specified cure for each indicium, the indicia are cleared and the account is not reportable under FATCA. If it does not, the account is treated as reportable under FATCA.

Answer: The account is a high value account (US$1,200,000 > US$1,000,000), so enhanced review is required. Besides electronic and paper records and the relationship manager's actual knowledge, the bank tests for a current US address, hold-mail instructions and a standing transfer to a US account. The US place of birth is an indicium because it appears in the searched data. It is cured only by a self-certification of non-US status, a non-US passport or other government ID, and either a Certificate of Loss of Nationality or a reasonable written explanation (why she has no certificate despite renouncing, or why she did not acquire US citizenship at birth). The US phone number, with no non-US number on record, is a separate indicium cured by a self-certification or documentary evidence of non-US status. If any indicium is not cured, the account is treated as reportable under FATCA.

Exam tips

Start every written answer by naming the regime (FATCA or CRS) and the basis (US status or tax residence). Examiners look for this first.
For scenario MCQs, check the account date, value and holder type before choosing an option. Many options differ on only one of these facts.
Remember the chain: institution to Indian authority to partner country. A wrong flow loses easy marks.
Link the topic to treaty exchange-of-information articles and to country-by-country reporting, since the paper can combine them in one case.
Do not quote exact penalty amounts or section numbers unless you are sure. State the consequence in words.

Practice questions from Latest Developments in International Taxation

Exchange of Information, FATCA and CRS: frequently asked questions

What is the main difference between FATCA and CRS?

FATCA is a US law implemented in India through a bilateral agreement and targets US persons. CRS is an OECD multilateral standard that targets tax residents of all participating countries. FATCA rests on US citizenship or status, and CRS rests on tax residence.

What is Form 61B?

It is the annual statement of reportable accounts that a reporting financial institution files with the Indian tax authority. It was filed in Form 61B under the Income-tax Rules, 1962 by 31 May. It lists accounts held by persons who are reportable under FATCA or CRS. The form number may differ under the rules made under the Income-tax Act, 2025, so check the current form and due date.

Who is a reporting financial institution?

It is a financial institution that must carry out due diligence and report accounts. Banks, custodians, specified insurers and investment entities are examples. The institution must also register and keep records.

Is automatic exchange of information the same as exchange on request?

No. Automatic exchange sends data on whole classes of accounts every year without a request. Exchange on request is made for a specific taxpayer when a foreign authority asks for it.

Does a customer's balance matter for reporting?

For pre-existing individual accounts, the balance decides the review depth. Under FATCA, the institution may apply the optional exemption for accounts of US$50,000 or less, and it can choose to review them anyway. Above US$50,000 up to US$1,000,000 is lower value, and above US$1,000,000 is high value, which needs enhanced review. Under CRS, up to US$1,000,000 is lower value with no de minimis exemption for individuals. For new accounts no threshold applies, and the balance is one of the data points reported.