India has a treaty and no totalization agreement — and the accounts are harder than the tax.
There is a US–India income tax treaty, so Indian income tax is creditable and double income tax is addressable. There is no totalization agreement, so US self-employment tax at 15.3% applies with no relief. The part that costs people money is not the rate — it is that an Indian mutual fund is a PFIC and a provident fund is not automatically deferred.
Tax snapshot — India
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Sources: IRS Publication 54; IRS Publication 901; US–India income tax treaty (1989) Article 25; IRC §1291–1298 (PFIC); FinCEN Form 114 instructions; SSA totalization agreement list; Rev. Proc. 2025-32. Checked 1 September 2026.
What that means on your return
Indian mutual funds are almost always PFICs for US purposes. That means Form 8621, and under the default method the gain is taxed at the highest ordinary rate with an interest charge for each year of deferral. A SIP running quietly for a decade can generate a worse US outcome than the same money in a savings account.
PPF and EPF are tax-favoured in India and their US treatment does not follow. There is no provision making either automatically tax-deferred to the US, so the annual accretion may be currently taxable and the account is reportable. This is the single most common surprise for clients with a working history in India.
NRE and NRO accounts both count towards the FBAR $10,000 aggregate and towards Form 8938. NRE interest being exempt from Indian tax makes it no less US-taxable — exemption in one country is not exclusion in the other.
The treaty's Article 25 governs the credit, and Indian surcharge and cess generally form part of the creditable income tax. Where Indian tax is paid at 30% plus surcharge, the credit usually beats the exclusion — but revoking the exclusion binds you for five years, so it is a decision, not a default.
If you hold agricultural land, inherited property, or an interest in a family HUF, say so early. Those raise Form 3520 and Form 8938 questions that are cheaper to answer before a return is filed than after.
Questions I get about India
Are my Indian mutual funds a problem on a US return?
Usually, yes. They are PFICs, which means Form 8621 and — under the default method — the highest ordinary rate on the gain plus an interest charge for every year of deferral. It is worth knowing before you buy more, not after you sell.
Is my PPF or EPF tax-free to the US?
No. Both are tax-favoured in India, and nothing in the treaty makes either automatically tax-deferred for US purposes. The account is reportable and the annual growth may be currently taxable.
My NRE interest is exempt from Indian tax. Do I still report it?
Yes. Indian exemption does not remove it from your US return, and the account still counts towards the FBAR $10,000 aggregate and Form 8938.
Should I claim the exclusion or the foreign tax credit in India?
At Indian rates of 30% plus surcharge and cess, the credit usually produces the better answer, and it leaves foreign-source income available for other purposes. But revoking the exclusion locks you out for five years — so it is compared on your numbers, not assumed.
Do I pay US self-employment tax on Indian consulting income?
Yes, at 15.3%, because there is no totalization agreement between the two countries. The treaty relieves double income tax; it does not reach social security.
When is my return due?
15 June, under the automatic extension for filers living abroad. Form 4868 moves it to 15 October, and I file the extension free.
Do I have to file an FBAR for my Indian bank account?
If your foreign accounts together passed $10,000 at any point in the year, yes. You can file it free through FinCEN's own system. The non-willful penalty for not filing is $16,536.
I have not filed for several years. What now?
The Streamlined Foreign Offshore Procedures: three returns, six FBARs and Form 14653 certifying non-willfulness. Penalties are waived. Note that the IRS terminated the separate Delinquent FBAR Submission Procedures around 1 July 2026.
Filing from India this year?
Twenty minutes with the Enrolled Agent who will prepare and sign it. Complete return, $599.
An IRS Enrolled Agent working only on US tax for Americans living abroad. I prepare and sign every return myself — 17 years in practice, 12 of them as an Enrolled Agent.