SEBI updates FATCA/CRS reporting duties of market intermediaries under the new Income-Tax Act, 2025

SEBI has issued a circular revising the reporting and due-diligence obligations of registered intermediaries under the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS), following the replacement of the Income-Tax Act, 1961 by the Income-Tax Act, 2025 (with the Income-Tax Rules, 2026) with effect from 1 April 2026. Under the old regime, FATCA/CRS reporting rested on Section 285BA of the 1961 Act read with Rules 114F to 114H and Form 61B. That framework is now replaced by Section 508 of the Income-Tax Act, 2025, read with Rules 238 to 240 and Form 166 of the Income-Tax Rules, 2026.

Rule 239(12)(a) requires a regulator such as SEBI to instruct the entities it regulates to follow the new due-diligence and reporting procedure. The circular, issued under Section 11(1) of the SEBI Act, 1992 read with Rule 239(12)(a), directs all SEBI-registered intermediaries that qualify as "Reporting Financial Institutions" under Rule 238(8) to comply with Rules 238 to 240, update self-certification and Controlling Person identification procedures, revise account-classification systems, and generate Form 166 in the new XML format with all mandatory fields, failing which the Income Tax portal will reject the filing. Intermediaries must also upload FATCA/CRS certifications to KYC Registration Agencies, and bear sole responsibility for correct reporting.