India's markets regulator has told every registered market intermediary to rebuild parts of its customer-onboarding and tax-reporting systems. In a circular issued on Wednesday, November 11, the Securities and Exchange Board of India (SEBI) directed intermediaries to incorporate Automatic Exchange of Information (AEOI) reporting and due-diligence requirements into their customer onboarding and Know Your Customer (KYC) frameworks.

Source: The Hindu BusinessLine

The directions follow the introduction of the Income-tax Act, 2025 and the Income-tax Rules, 2026, which replaced the earlier income-tax framework with effect from April 1, 2026. Under the revised framework, reporting for accounts covered by the US Foreign Account Tax Compliance Act (FATCA) and the international Common Reporting Standard (CRS) is now governed by Section 508 of the Income-tax Act, 2025, read with Rules 238 to 240 and Form 166 of the Income-tax Rules, 2026.

Source: ANI via Devdiscourse

SEBI said all registered intermediaries that are Reporting Financial Institutions (RFIs) must take the necessary steps to ensure compliance with Rules 238 to 240. Intermediaries have been asked to review and update their customer self-certification procedures, their systems for identifying controlling persons, and their account-classification processes so that existing and new accounts are correctly distinguished.

Their reporting software must also be updated to incorporate the mandatory fields under Form 166 of the revised rules, and intermediaries must upload the FATCA and CRS certifications collected from clients to the systems of KYC Registration Agencies (KRAs). SEBI clarified that the onus of obtaining and reporting the FATCA and CRS certification, and of related compliances, lies solely with the respective intermediaries.

The regulator advised intermediaries to follow the Central Board of Direct Taxes' guidance note on FATCA and CRS, issued on July 24, 2026, for compliance with the revised rules. The latest circular builds on SEBI's earlier FATCA and CRS circulars of August 2015, September 2015 and February 2024, and has been issued under Section 11(1) of the SEBI Act, 1992, read with Rule 239(12)(a) of the Income-tax Rules, 2026.

FATCA is a United States tax-compliance framework and CRS is the international standard for exchanging financial-account information between participating jurisdictions to prevent tax evasion. For investors, the practical effect is that brokers, mutual funds and other intermediaries may seek fresh self-certifications and updated KYC details as their systems are aligned to the new rules.