Treatment of business entities
An individual has various options for conducting business in India. An individual can opt for forming a proprietary concern, can be a partner in a partnership firm, can be a partner in a limited liability partnership (LLP), can create an LLP, can create and become a member of an association of persons, or can create and be part of a body of individuals. The tax law has different provisions for taxing and assessing different types of entities.
The Government of India has signed an Inter-Governmental Agreement (IGA) with the United States to implement the Foreign Account Tax Compliance Act (FATCA) in India. According to the IGA read with the FATCA provisions, foreign financial institutions in India are required to report tax information about US account holders to the Indian Government which will, in turn, relay that information to the US Internal Revenue Service (US IRS). Furthermore, the US IRS will provide similar information about Indian citizens having any accounts or assets in the US. This automatic exchange of information has begun from 30 September 2015. Subsequent to the signing of IGA, the Indian Government enacted rules and prescribed forms relating to FATCA reporting in India.