SEBI issues reporting requirements for financial institutions relating to custodial accounts

SEBI issues reporting requirements for financial institutions relating to custodial accounts

June 21, 2017 Corporate 0

The Securities and Exchange Board of India (“SEBI”) has issued a circular dated 15th June, 2017relating to reporting of interest and dividend information in cases of custodial accounts. This circular is effective from 15th June, 2017.

Under Section 114G(1)(e)(i) of the Income Tax Rules, 1962, a Reporting Financial Institution is required to report the following set of information in respect to custodial account:

– The total gross amount of interest;

– The total gross number of dividends; and

– The total gross amount of other income generated with respect to the assets held in the account during the calendar year.

With a view to strengthen the above reporting requirements, the SEBI has further directed the following:

  1. Depositories must provide additional field in the depository system to the Registrar to an Issue and Share transfer agents (“RTAs”) by July 15, 2017 so that the RTAs can incorporate the details of their corporate action i.e. dividend/interest in rupee terms per unit of the security at the time of setting up of corporate action.
  1. The reporting with respect to dividend / interest is to be done by the Depositories Participants (“DP”) on ‘entitlement basis and not based on actual payment received by the demat account holder.
  1. In case a demat account is identified as a ‘reportable account’ during a calendar year by the DP, the reporting must be done for the dividend / interest entitlements during the entire calendar year i.e. including the period of the calendar year before identification of such a ‘reportable account’ by the DP.

Source: Securities and Exchange Board of India.

 

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