šŸ‡®šŸ‡³NRI Guide

NRI from USA\nInvesting in India Guide

FATCA, FBAR, 401(k), and cross-border tax ā€” everything US-based NRIs need to know about managing Indian investments.

Indian NRIs in US
4.4M+
FBAR Threshold
$10,000
FATCA Threshold
$50,000
DTAA Status
Active

šŸ‡ŗšŸ‡øUS NRIs ā€” Tax & Investment Overview

India-US DTAA: Covers income tax, capital gains, and withholding tax. Key provisions: ā€¢ Salary: Taxed only in the country of employment (US for most) ā€¢ Indian rental income: Taxed in India first, then claim Foreign Tax Credit (Form 1116) on US return ā€¢ Capital gains on Indian shares: Taxed in India, credit available in US ā€¢ Dividends from Indian companies: 20% withholding in India (DTAA may reduce to 15-25%) Critical US compliance: ā€¢ FBAR (FinCEN 114): Must report Indian bank/MF accounts if aggregate >$10,000 at any time ā€¢ FATCA (Form 8938): Report Indian financial assets if >$50K (single) or >$100K (married filing jointly) ā€¢ Schedule B: Report Indian interest and dividend income ā€¢ Form 3520: Report gifts from Indian family members if >$100K

šŸ’°FATCA Impact on Indian Investments

FATCA (Foreign Account Tax Compliance Act) significantly affects US NRIs investing in India: ā€¢ Many Indian AMCs (mutual fund companies) reject investments from US persons due to FATCA compliance burden ā€¢ Only select AMCs accept US NRI investments: check current lists as they change frequently ā€¢ Indian banks automatically report US NRI account information to the IRS through FATCA ā€¢ Passive Foreign Investment Company (PFIC) rules may apply to Indian mutual funds ā€” consult a cross-border tax advisor Workaround: Some US NRIs invest through NRE FDs (simpler FATCA reporting) and Indian stocks (not considered PFIC) instead of mutual funds.

šŸ”„Moving 401(k)/IRA Money to India

Your 401(k) and IRA remain in the US ā€” they are US retirement accounts regardless of where you live. Key considerations: ā€¢ Continue contributing to 401(k) if employed by a US company ā€¢ Roth IRA: Contributions can be withdrawn tax-free anytime (good for flexibility) ā€¢ Traditional IRA/401(k): Withdrawals taxed as ordinary income ā€” plan for US tax brackets ā€¢ If you return to India permanently: 401(k) distributions are taxable in US, but India-US DTAA may provide partial relief You CANNOT transfer 401(k)/IRA to PPF, NPS, or any Indian scheme directly.

šŸ Indian Property for US NRIs

US NRIs can buy residential and commercial property in India ā€” no RBI approval needed. Tax implications: ā€¢ Indian rental income: Taxable in India (30% slab) + reportable on US return (Schedule E) ā€¢ FBAR: Indian property itself isn't reportable, but rental income in NRO account is ā€¢ When selling: India LTCG (20% with indexation if held 2+ years) + US capital gains tax, with DTAA credit ā€¢ TDS: Buyer must deduct 20% TDS on LTCG; claim refund if actual tax is lower Repatriation of sale proceeds: Up to $1M/year from NRO after tax clearance (Form 15CA/15CB).

šŸ“±Why US NRIs Use Richify

Richify operates in both the US and India ā€” making it the only AI financial app that manages both sides of your financial life: ā€¢ Track US assets (401k, Roth IRA, portfolios) alongside Indian assets (MFs, PPF, NPS, property) ā€¢ US tools: FIRE Calculator, Credit Score Quest, 401k vs Roth comparison ā€¢ India tools: SIP to 1 Crore, NPS vs PPF vs ELSS, retirement planner ā€¢ Ask Felix about cross-border tax questions, FBAR requirements, and investment strategies ā€¢ Privacy-first: no bank/brokerage account linking in either country

ā“ Frequently Asked Questions

Do I need to report Indian bank accounts to the IRS?ā–¼
Yes ā€” if your aggregate balance across all Indian financial accounts exceeds $10,000 at any point during the year, you must file FBAR (FinCEN 114). Additionally, FATCA requires Form 8938 if Indian financial assets exceed $50,000 (single filer). Penalties for non-reporting are severe.
Can US NRIs invest in Indian mutual funds?ā–¼
It's complicated. Many Indian AMCs don't accept investments from US persons due to FATCA compliance. Some that do: select schemes from SBI, HDFC, UTI. The list changes frequently. Also, Indian MFs may be classified as PFICs which have complex US tax reporting. Consider Indian stocks or NRE FDs instead.
How is Indian rental income taxed for US NRIs?ā–¼
Double taxation applies, but with relief: India taxes rental income at slab rates (30% for most NRIs). You then report the same income on your US tax return (Schedule E) and claim a Foreign Tax Credit (Form 1116) for Indian tax paid. Net effect: you pay the higher of the two country's tax rates.
Can I contribute to PPF from the US?ā–¼
NRIs cannot open new PPF accounts. If you had one before leaving India, you can continue it until the original 15-year maturity, but post-maturity extension is generally not allowed for NRIs. The RBI/finance ministry has given conflicting guidance ā€” consult a CA.

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ā“ Frequently Asked Questions

Do I need to report Indian bank accounts to the IRS?

Yes ā€” if your aggregate balance across all Indian financial accounts exceeds $10,000 at any point during the year, you must file FBAR (FinCEN 114). Additionally, FATCA requires Form 8938 if Indian financial assets exceed $50,000 (single filer). Penalties for non-reporting are severe.

Can US NRIs invest in Indian mutual funds?

It's complicated. Many Indian AMCs don't accept investments from US persons due to FATCA compliance. Some that do: select schemes from SBI, HDFC, UTI. The list changes frequently. Also, Indian MFs may be classified as PFICs which have complex US tax reporting. Consider Indian stocks or NRE FDs instead.

How is Indian rental income taxed for US NRIs?

Double taxation applies, but with relief: India taxes rental income at slab rates (30% for most NRIs). You then report the same income on your US tax return (Schedule E) and claim a Foreign Tax Credit (Form 1116) for Indian tax paid. Net effect: you pay the higher of the two country's tax rates.

Can I contribute to PPF from the US?

NRIs cannot open new PPF accounts. If you had one before leaving India, you can continue it until the original 15-year maturity, but post-maturity extension is generally not allowed for NRIs. The RBI/finance ministry has given conflicting guidance ā€” consult a CA.