The Classic Partners LLP

US Tax Implications & Reporting Requirements

US citizens, Green Card holders, and US tax residents with Indian income or assets face dual obligations — Indian tax on India-sourced income and US tax on worldwide income, plus FBAR and FATCA reporting. We coordinate both sides.

Get US–India Tax Help

Why US Persons with Indian Ties Need Special Care

The US taxes its citizens and residents on worldwide income, regardless of where they live. So an NRI in the US pays Indian tax on Indian income (rent, NRO interest, capital gains) and must report that same income on the US return — with relief coordinated through the India–US DTAA and foreign tax credits. Getting the sequencing and disclosures wrong invites penalties on the US side that often dwarf the tax itself.

Key US Reporting Obligations

FBAR (FinCEN Form 114): mandatory if aggregate foreign (Indian) account balances exceed USD 10,000 at any time in the year — including NRE, NRO, FCNR, PPF, and demat accounts.
FATCA (Form 8938): reporting of specified foreign financial assets above thresholds that vary by filing status and residence.
Form 3520: gifts or inheritances from a foreign (Indian) person exceeding USD 100,000 in a year must be reported, even though typically not taxable.
PFIC rules (Form 8621): Indian mutual funds and ULIPs are usually Passive Foreign Investment Companies for US purposes, attracting punitive US taxation unless elections are made.
Form 1116: foreign tax credit for Indian taxes paid, preventing double taxation on the same income.

Indian-Side Coordination

Correct Indian residential status and ITR filing so Indian tax paid is creditable in the US.
DTAA positions on NRO interest, dividends, and capital gains aligned between both returns.
Tax-cleared repatriation of Indian funds with Form 15CA/15CB, matched to FBAR/FATCA disclosures.
US estate-tax exposure on US-situs assets for non-US persons (threshold as low as USD 60,000) factored into investment choices.

How We Help

Dual-Filing Coordination

India ITR and US return positions reconciled line by line.

FBAR/FATCA Mapping

Complete inventory of Indian accounts and assets for US disclosure.

PFIC Strategy

Restructuring Indian mutual fund holdings to limit PFIC pain.

Foreign Tax Credits

Form 67 in India and Form 1116 data on the US side.

Gift/Inheritance Reporting

Form 3520 events from Indian gifts and inheritance.

Cross-Border Advisory

Part of our wider international tax services.

Frequently Asked Questions

Do US-based NRIs pay tax in both India and the US?

Indian-source income is taxed in India, and the same income is reportable on the US return because the US taxes worldwide income; double taxation is relieved through the India–US DTAA and foreign tax credits rather than by skipping either filing.

What is FBAR and who must file it?

FBAR (FinCEN Form 114) must be filed by US persons whose foreign financial accounts — including Indian NRE, NRO, FCNR, PPF, and demat accounts — exceed USD 10,000 in aggregate at any point during the year.

Are Indian mutual funds a problem for US taxpayers?

Yes. Indian mutual funds are generally treated as PFICs under US law, which can trigger punitive taxation and Form 8621 filing, so US-person NRIs often restructure into direct equities or US-domiciled funds.

Is an inheritance from India taxable in the US?

Generally no US tax applies on receiving it, but a gift or inheritance from a foreign person above USD 100,000 in a year must be reported on Form 3520, and later income from those assets is taxable.

How is double taxation avoided between India and the US?

Through the India–US DTAA and credit mechanisms — Indian tax paid is claimed as a foreign tax credit on the US return (Form 1116), and US tax can be credited in India via Form 67 where India is the residence country.

US person with Indian income or accounts?

We'll align your Indian filings with your US reporting so nothing is taxed twice — and nothing goes unreported.