Visa holders · From India
In the year of moving to the US from India, taxes in India can still reach your first US paychecks.
India’s tax year runs from April 1 to March 31. If you are an Indian citizen leaving for a job abroad, you stay resident that year only with 182 days or more there. An Indian resident can owe Indian tax on US pay too. India then credits the US income tax on that pay, up to its own tax on it (treaty Article 25(2)(a)). A non-resident pays Indian tax only on income arising or received in India, such as rent and NRO interest.
Updated · Sources
India’s figures for tax year 2026-27
- 15%
- is the most India may take from your NRO interest under the treaty, and the most the US will credit.
- 12.5%
- is India’s rate on a non-resident’s long-term gain on property, before surcharge and cess.
- 20%
- is the tax a bank collects at source on a parent’s gift remittances once the year’s total passes ₹10 lakh.
Form 6166, the IRS certificate of US residency, is one of the papers an Indian bank needs before it applies the 15%. A parent claims the 20% against their own Indian tax.
Which US forms do your accounts and policies in India need?
You become a US resident with a green card or by passing the substantial presence test. From your residency starting date, each item below can add a form to your US return. That holds even while India still counts you as an NRI (non-resident Indian).
You keep bank accounts in India
You file the FBAR once your foreign accounts together top $10,000 at any point in the year. It lists every NRE, NRO and FCNR account, plus Indian mutual funds and cash-value life policies. A joint account with a parent counts at its full value.
You have a PPF, EPF or NPS account
Form 8938 generally counts PPF, EPF and NPS balances. Its instructions make foreign accounts and foreign pension plans reportable. For a single filer in the US, the thresholds are $50,000 at year end and $75,000 at any time. They may count toward your FBAR total too.
You own Indian mutual funds or ETFs
Indian mutual funds are managed trusts under SEBI’s rules, so US tax law generally treats them as foreign corporations and PFICs. Each fund generally means a Form 8621 of its own every year. The IRS has said nothing about unit-linked insurance plans (ULIPs), so their US treatment is unsettled.
You pay premiums to an Indian insurer
Premiums on your life policy from an Indian insurer, such as the Life Insurance Corporation of India, may carry a 1% US excise tax. You report it on Form 720 each quarter. You can rely on the treaty’s exemption only if the insurer has a closing agreement with the IRS. No Indian insurer is on the IRS lists of insurers that have one.
When an NRI sells property in India, only the final Indian tax counts toward the US credit.
The buyer deducts tax at source (TDS) from what they pay a non-resident seller. The 1% rate many buyers expect applies only when the seller is a resident of India. An NRI seller can apply for a lower-deduction certificate under section 395(1) of India’s Income-tax Act, 2025, to cut the TDS in advance.
TDS on the ₹2 crore price
₹29.9 lakh
With no certificate, the buyer here deducts 14.95% of the whole price. That is the 12.5% rate, a 15% surcharge above ₹1 crore and the 4% cess.
India’s tax on the ₹80 lakh gain
₹11.44 lakh
With no other Indian income, your final tax is 12.5% of the gain, plus a 10% surcharge and the cess.
Refund on your Indian return
₹18.46 lakh
India repays the excess only on a return filed there, due July 31, 2027.
A non-resident cannot adjust the cost for inflation (indexation). India keeps that option for residents who bought before July 23, 2024. The US figures the gain in dollars, and Form 1116 credits the ₹11.44 lakh within its limit. If the flat was your main home for 2 of the last 5 years, you may exclude up to $250,000 of that gain. The same credit rule applies to a US citizen selling property in India: only the final Indian tax counts. India’s exemption for reinvesting in another Indian home does not reduce the US gain.
Which of your income from India faces dual taxation?
The rows show a year in which the US counts you as resident and India does not. Where both countries tax the same income, a foreign tax credit for India’s tax offsets the US tax, within its limit.
| India | US | |
|---|---|---|
| NRE and FCNR interest | Exempt While you are a non-resident | Taxed No Indian tax to credit |
| NRO interest | Treaty rate Article 11(2)(b) | Taxed Credit limited to the treaty rate |
| Rent from a flat in India | Taxed After a 30% standard deduction | Taxed |
| Gains on Indian equity funds | 20% or 12.5% Short-term, or long-term above ₹1.25 lakh, before surcharge and cess | PFIC rules No capital gains rate without a QEF election |
| A monthly pension from a past private employer in India | Not taxed Article 20(1); not a government or EPS pension | Taxed |
| An EPF or NPS lump sum | Mostly exempt EPF after 5 years of service, NPS up to 60% | May be taxed Article 23, with a credit for any Indian tax |
Five mistakes that cost people who move from India.
Assuming your spouse leaves India’s tax net with you
A spouse who follows you without a job, or a student, may stay an Indian resident in the year of the move. The relief for citizens leaving for a job abroad does not cover them, so India’s 60-day test can still apply. That test counts 60 days in India that year, plus 365 days over the 4 years before.
Staying too long on a visit home
A long visit home can make you an Indian resident again for that tax year. That normally takes 182 days in India. If your Indian income is over ₹15 lakh, 120 days are enough when you spent 365 days there in the 4 years before.
Drawing your EPF after the move
The EPF lets you withdraw the whole balance just before you migrate for a job abroad. Once you have left, a full withdrawal waits until you have been out of covered employment for 12 months. A payout received before your US residency starts is generally outside US tax.
Crediting Indian tax in the wrong year
India’s tax year ends March 31, so tax on one Indian year can fall in two US tax years. On the cash method, you claim the credit in the year you pay the tax. You can elect to claim it as it accrues instead, and that choice binds every later year.
Expecting a totalization agreement
With no US-India totalization agreement, most US wages are subject to Social Security and Medicare tax, even on an Indian payroll. Your US years also add nothing toward a pension from India’s Employees’ Pension Scheme (EPS), which needs 10 years of eligible service.
We report every account you keep in India on the US returns we prepare.
We file your US returns from your arrival year on and work alongside your accountant in India.
- We report your NRE, NRO and FCNR interest, and credit the Indian tax the treaty allows on NRO interest.
- We prepare your FBAR, any Form 8938, a Form 8621 for each Indian fund and Form 3520 for gifts over $100,000. The instant quote prices each NRE, NRO and FCNR account and each Indian fund you enter.
- Before you migrate, we compare the US tax on drawing your EPF early with the tax on leaving it in India.
- We compare selling property in India before your US residency starts with selling after it. After a sale, we set the US estimated payment and credit only your final Indian tax.
- Should the IRS or your state send a notice on a return we prepared, our answer is part of the fee. That covers an IRS query on your credit for tax withheld in India.
- Individual return
- from $195
- Business return
- from $495
We quote a flat fee before work starts. We do not bill hourly.
What NRIs in the US ask about their money in India.
Is transferring money from India to the USA taxable?
Not by itself: moving your own savings from India to the US is generally not income in either country. What each country taxes is the interest, rent or gains the money earned. A gift from your parents is not taxed either, though Form 3520 is due once their gifts pass $100,000 in a year. Each parent may send up to $250,000 a financial year under the RBI’s Liberalised Remittance Scheme. Past ₹10 lakh a year, the bank collects 20% tax at source (TCS) on a gift, a prepayment of the parent’s Indian tax.
Who pays 42% tax in India?
Only someone on India’s optional old tax regime with over ₹5 crore of income pays the 42% rate. That ₹5 crore leaves out dividends, long-term capital gains and short-term gains on listed shares or equity funds. The rate is 30% plus a 37% surcharge and the 4% cess, which comes to 42.744% at the margin for tax year 2026-27. The default new regime caps the surcharge at 25%, so its top rate is 39%. Non-residents face the same schedules, though only residents can claim India’s tax rebate.
Is interest on my NRE or NRO account taxable in the US?
Yes: as a US resident alien, you owe US tax on all NRE, NRO and FCNR interest as ordinary interest. India exempts NRE and FCNR interest for non-residents, but that binds only India, so there is no Indian tax to credit. Indian banks usually withhold 31.2% on NRO interest. The treaty cuts India’s tax to 15% once the bank has Form 6166, the IRS certificate of US residency, and India’s other required papers. If the bank withheld 31.2%, your foreign tax credit still stops at 15%. You reclaim the excess from India on an Indian return.
Are PPF and EPF taxable in the US, and how do I report them?
In principle, yes: no US rule or treaty article exempts PPF or EPF from US tax. The IRS has never said how or when the US taxes them. India exempts PPF interest and most EPF payouts, yet those exemptions bind only India. A lump-sum EPF withdrawal is other income under Article 23 of the US-India tax treaty, which both countries may tax. Form 8938 reports PPF and EPF balances above its thresholds, and they may count toward your FBAR total as well. Whether either is a foreign trust needing Form 3520 is also unsettled.
Sources
- US-India income tax convention (IRS text)
- US Treasury, Technical Explanation of the US-India convention
- Income-tax Act, 2025 (India), as amended by the Finance Act, 2026
- Finance Act, 2026 (India), Gazette of India
- Reserve Bank of India, Master Direction on the Liberalised Remittance Scheme
- Employees’ Provident Funds Scheme, 2026 (G.S.R. 525(E))
- Employees’ Pension Scheme, 2026 (G.S.R. 527(E))
- National Savings Institute, Public Provident Fund
- SEBI (Mutual Funds) Regulations, 2026
- IRS, Publication 514, Foreign Tax Credit for Individuals
- 26 C.F.R. § 1.901-2, Income, war profits, or excess profits tax paid or accrued
- IRS, Form 6166, Certification of U.S. Tax Residency
- 26 U.S.C. § 4371, Imposition of tax (policies issued by foreign insurers)
- IRS, Rev. Proc. 2003-78
- IRS, Exemption from section 4371 excise tax
- IRS, Instructions for Form 720 (Rev. June 2026)
- IRS, Instructions for Form 8938
- IRS, Instructions for Form 3520 (Rev. December 2025)
- 31 C.F.R. § 1010.350, Reports of foreign financial accounts
- 26 U.S.C. § 1297, Passive foreign investment company
- 26 U.S.C. § 102, Gifts and inheritances
- 26 U.S.C. § 121, Exclusion of gain from sale of principal residence
- Social Security Administration, totalization agreements overview
Reviewed and updated September 2026. General information, not advice for your situation.