FATCA and FBAR Explained: What NRIs in the US Must Know About Reporting Indian Bank Accounts
Let us get straight to the point. If you are an Indian national living in the United States on a green card, or if you have become a US citizen, the IRS wants to know about your financial accounts and assets back in India. Two separate reporting requirements apply: FATCA (Form 8938) and FBAR (FinCEN Form 114). They overlap in some ways, but they serve different purposes, go to different agencies, and have different thresholds.
Ignoring either one can cost you dearly. And thanks to the India US Intergovernmental Agreement (IGA), which India signed in 2014 under the Model 1 framework and which became operational for foreign financial institutions from July 1, 2014, the IRS likely already has data about your Indian accounts. Indian financial institutions, including major banks like SBI and HDFC, report US account holder data (your name, TIN, address, account number, balance, and income) to the IRS through India's Central Board of Direct Taxes (CBDT) via automatic annual exchanges. Filing these forms is not optional. It is a matter of confirming what the IRS can already see.
So let us walk through everything you need to know.
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Who Exactly Needs to File?
You fall under these rules if you are a US person. That means:
- US citizens (including those born in the US who later moved to India)
- Green card holders (lawful permanent residents), even if you live in India full time
- Certain resident aliens who meet the substantial presence test
- US entities (corporations, partnerships, trusts, LLCs) with financial interests in or signature authority over foreign accounts
- US territory residents and entities (subject to FBAR; Form 8938 has specific rules for territory filers)
Key point for NRIs returning to India: You remain a US person and must keep filing until you formally give up your green card or US citizenship through expatriation (using Form 8854). Simply moving back to India does not end the obligation. Green card holders lose their obligation only upon formal abandonment of the green card. NRIs returning to India must file final dual status returns for the transition year, and US citizens retain lifelong obligations until expatriation.
Important reminder: You must aggregate all foreign assets and accounts globally, not just those in India. If you hold accounts in Singapore, the UK, the UAE, or anywhere else outside the United States, those count toward your thresholds too.
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FBAR: The $10,000 Rule
What It Is
FBAR stands for Report of Foreign Bank and Financial Accounts. You file it electronically as FinCEN Form 114 through the BSA E Filing System. It goes to the Financial Crimes Enforcement Network (FinCEN), not the IRS directly. Its legal authority comes from the Bank Secrecy Act (BSA), and its purpose is anti money laundering disclosure.
Important: Paper filings are not accepted. You must file electronically through FinCEN's BSA E Filing System. No exceptions. Filing is free.
When You Must File
You must file an FBAR if the aggregate maximum value of all your foreign financial accounts exceeds $10,000 at any point during the calendar year. Notice the words "at any point." This is not about your December 31 balance. If your NRE savings account briefly held $6,000 and your NRO fixed deposit peaked at $5,000 on different days, the combined $11,000 triggers the filing requirement.
You must file even if the accounts generate no US taxable income. You must file even if you are not otherwise required to file a US tax return. There is no exemption for low income filers or for accounts that earn tax free interest in India (such as NRE account interest).
The IRS emphasizes there is no safe harbor here. You must perform precise threshold calculations annually.
What Counts as a Reportable Account
- NRE savings and current accounts
- NRO savings and current accounts
- Fixed deposits (NRE and NRO)
- Recurring deposits
- Sweep accounts
- Demat and trading accounts (report the maximum value of securities held)
- Mutual fund accounts held directly with Indian AMCs
- ETF holdings in demat accounts
- Securities and futures accounts
- Life insurance policies with cash surrender value
- Any other financial instrument held for investment in a foreign financial account
- Any account where you have signature authority or financial interest, even if the money belongs to a family member
Investment angle: If you actively invest in Indian stock markets, mutual funds, ETFs, InvITs, or private placements through a demat or trading account, each of those accounts counts as a reportable foreign financial account. The maximum market value of your holdings during the year determines the reportable amount, not just your cash balance. A strong rally in your Indian equity portfolio could push you over the threshold even if your bank balances are modest. FBAR catches low balance accounts that might miss the higher FATCA thresholds, so even a modest Indian portfolio deserves careful tracking.
Watch out for joint accounts. If your name appears on your parents' NRO account in India, you must report the full value of that account, even if you never deposited or withdrew a single rupee. Each US person with a financial interest or signature authority reports the full value individually.
Spousal filing: Spouses file separately. There is no joint FBAR. FinCEN provides FAQs specifically covering joint account rules and spousal filing situations. Review these if your situation involves shared accounts with family members.
How to Value Your Accounts
Track the maximum balance during the year for each account. Convert to US dollars using the Treasury Department's year end exchange rate. You can find official rates on the Treasury reporting rates page.
For demat accounts holding stocks, ETFs, InvITs, or mutual fund units, use the peak market value of your holdings during the year. Monthly portfolio statements from your broker or depository participant can help you identify this.
Deadline
April 15 of the following year, with an automatic extension to October 15. You do not need to request this extension. For 2025 accounts, the FBAR is due by April 15, 2026, or October 15, 2026 with the automatic extension. The FBAR is filed separately from your tax return and is independent of whether you file a tax return at all.
Record Retention
Retain all records supporting your FBAR filings (bank statements, balance confirmations, conversion calculations) for at least 5 years from the filing deadline.
Statute of Limitations
There is no statute of limitations for unfiled FBARs involving non willful violations. This means the government can come after you for missed filings from any year.
Penalties for Not Filing
Penalties are adjusted for inflation each year. Here are the figures based on the latest available inflation adjustments:
| Type | Penalty | |---|---| | Non willful violation | Up to $16,536 per account per year (2026 inflation adjusted figure) | | Willful violation | Up to the greater of $168,043 or 50% of the account balance, per violation |
These are per violation, per year. Multiple years of missed filings can add up to devastating amounts. If you have five unreported accounts across three missed years, the non willful penalties alone could exceed $240,000. Criminal penalties may also apply for willful non compliance.
Be alert to scams. The IRS warns about scams targeting FBAR filers. Use only the official BSA E Filing System and verify any communication claiming to be from FinCEN or the IRS.
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FATCA (Form 8938): The Asset Disclosure
What It Is
The Foreign Account Tax Compliance Act, enacted in 2010 as part of the HIRE Act and enforced under Internal Revenue Code Section 6038D, requires you to report specified foreign financial assets (SFFAs) on Form 8938, Statement of Specified Foreign Financial Assets, which you attach to your annual US tax return (Form 1040 or Form 1040NR for dual status filers). Form 8938 has been mandatory since tax year 2011 (first filings in 2012) and continues to apply for 2025 and beyond. FATCA became operational for foreign financial institutions from July 1, 2014.
You only need to file Form 8938 if you are required to file a tax return and you exceed the reporting thresholds. If you are under the thresholds for Form 8938 but over $10,000 for FBAR, you still must file the FBAR.
How It Differs from FBAR
Think of it this way:
| Feature | FBAR (FinCEN 114) | FATCA (Form 8938) | |---|---|---| | Filed with | FinCEN (Treasury) via BSA E Filing | IRS (with your tax return) | | Legal authority | Bank Secrecy Act (BSA) | IRC Section 6038D | | Purpose | Anti money laundering | Tax compliance | | Threshold (Single, US resident) | $10,000 aggregate anytime | $50,000 year end / $75,000 anytime | | Threshold (Married joint, US resident) | $10,000 aggregate anytime | $100,000 year end / $150,000 anytime | | Threshold (Living abroad) | $10,000 aggregate anytime | $200,000 year end / $300,000 anytime (single) | | Covers | Financial accounts only | Accounts plus stocks, securities, mutual funds, partnership interests, insurance, pensions, trusts, foreign entities | | Filing method | Electronic via BSA E Filing only | Attached to Form 1040 or Form 1040NR | | Requires tax return | No | Yes | | Record retention | 5 years | 3 years from filing date | | Joint account reporting | Full value reported by each US person | Prorated based on your proportionate interest (full value if joint with non US spouse) | | Territory applicability | Yes | Yes (with specific rules for territory filers) |
You may need to file both. They are not interchangeable. If you qualify for both, you report the same accounts on each form separately. Duplicate information across both forms is expected and allowed. The IRS recommends checking both requirements if your foreign accounts exceed $10,000. There is no double reporting credit that lets you skip one form because you filed the other. NRIs need to reconcile data across both filings to avoid IRS flags, since Indian banks report US account holders to the IRS through the India US IGA.
FATCA Thresholds
Thresholds depend on your filing status and where you live. These thresholds are updated annually for inflation via IRS Revenue Procedures (for example, Rev. Proc. 2024 40 for 2024):
If you live in the United States:
| Filing Status | Year End Value | Maximum Value Anytime | |---|---|---| | Single or Unmarried | $50,000 | $75,000 | | Married Filing Jointly | $100,000 | $150,000 |
If you live outside the United States (for example, an NRI green card holder residing in India):
| Filing Status | Year End Value | Maximum Value Anytime | |---|---|---| | Single | $200,000 | $300,000 | | Married Filing Jointly | $400,000 | $600,000 |
You must file if you exceed either the year end threshold or the anytime threshold. Note that living in the US gives you a much lower threshold, so NRIs who move from India to the US should track their residency status carefully because the shift can dramatically lower the point at which Form 8938 kicks in.
What You Must Report Under FATCA
Everything covered by FBAR, plus a broader range of assets:
- Foreign financial accounts (NRE, NRO, FDs, recurring deposits)
- Foreign deposit accounts and custodial accounts
- Foreign stocks and securities not held in a US brokerage account
- Mutual funds held with Indian AMCs
- ETFs held in Indian demat accounts
- Interests in InvITs and REITs listed on Indian exchanges
- Private placements and unlisted equity holdings in Indian companies
- Interests in foreign partnerships or foreign entities
- Foreign issued insurance contracts with cash value
- Foreign annuities
- Foreign pensions (including Indian PPF, NPS, and EPF if thresholds are met)
- Foreign trusts (if you own more than 50%)
- Contracts with non US persons held outside the US
- Financial instruments and contracts held for investment
- GIFT City investments
Investment angle: FATCA casts a wider net than FBAR. If you hold Indian stocks directly (not through a US brokerage), own units in Indian mutual funds, have interests in InvITs or REITs, or hold unlisted equity in Indian startups or private companies, all of these count as specified foreign financial assets. A diversified Indian investment portfolio can easily push you past the thresholds, especially during bull market years when asset values surge. Track your peak values carefully throughout the year, not just at year end.
Penalties for Not Filing Form 8938
FATCA penalties are separate from and in addition to FBAR penalties:
| Type | Penalty | |---|---| | Failure to file | Up to $10,000 per violation | | Continued failure after IRS notice | Up to an additional $50,000 (if not corrected after IRS notice) | | Accuracy related penalty | Up to 40% of underpayments attributable to undisclosed foreign financial assets |
Criminal penalties may also apply for willful non compliance. These penalties stack on top of FBAR penalties, so failing to file both forms for the same accounts can result in combined penalties that are truly staggering.
Deadline
Form 8938 is due with your tax return. For most filers, that means April 15 of the following year, with extensions available if you extend your tax return. Unlike FBAR, Form 8938 does not have its own separate automatic extension. It follows whatever deadline applies to your Form 1040.
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The India US IGA: Why the IRS Already Knows About Your Accounts
The India US Intergovernmental Agreement (IGA), signed in 2014 under the Model 1 framework, created a system of automatic information exchange between Indian financial institutions and the IRS. Here is how it works:
1. Indian banks, mutual fund companies, insurance companies, and other financial institutions identify account holders who are US persons. 2. They report your account details (name, US taxpayer identification number, address, account number, account balance, and income earned) to India's Central Board of Direct Taxes (CBDT). 3. CBDT transmits this data to the IRS annually.
This means the IRS can cross check what Indian institutions report against what you disclose on your FBAR and Form 8938. Mismatches between the two can trigger audits and inquiries. The IGA covers India as country number 97 on the IRS list of participating jurisdictions.
Practical impact for NRI investors: If you hold a demat account with an Indian broker, mutual fund folios with Indian AMCs, or insurance policies with Indian insurers, those institutions are likely reporting your information to the IRS through this channel. Relying on the assumption that "the IRS will never find out" about your Indian accounts is no longer realistic.
US tax treaties with India do not exempt you from reporting. The India US tax treaty may provide relief from double taxation on certain income, but it does not eliminate your obligation to file FBAR or Form 8938. Reporting and taxation are separate obligations.
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Additional Reporting Forms NRIs Should Know About
FBAR and Form 8938 are the two big ones, but depending on your situation, you may also need to file:
- Form 3520 / 3520A: If you receive gifts or inheritances from foreign persons exceeding $100,000 in a year, or if you have transactions with foreign trusts.
- Form 5471: If you are a US shareholder of a controlled foreign corporation (for example, if you own more than 10% of an Indian private company).
- Form 8621: If you hold passive foreign investment companies (PFICs), which can include certain Indian mutual funds.
- Form 8865: If you have interests in certain foreign partnerships.
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What If You Missed Filing in Previous Years?
If you have not filed FBARs or Form 8938 for past years, do not panic, but do act. The IRS offers the Streamlined Filing Compliance Procedures for taxpayers who can certify that their failure to file was non willful. Under these procedures:
- You file amended tax returns for the most recent 3 years.
- You file delinquent FBARs for the most recent 6 years.
- Penalties are limited compared to what you would face in an audit.
Do not use these procedures if your non compliance was willful. Willful non compliance carries far harsher consequences, including potential felony charges. If you are unsure whether your situation qualifies as non willful, consult a tax professional before proceeding.
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Quick Reference: Key Deadlines and Thresholds
| Item | Detail | |---|---| | FBAR threshold | $10,000 aggregate maximum value at any point during the year | | FBAR deadline | April 15 (automatic extension to October 15) | | FBAR filing method | Electronic via BSA E Filing System | | Form 8938 threshold (Single, US resident) | $50,000 year end or $75,000 anytime | | Form 8938 threshold (Married joint, US resident) | $100,000 year end or $150,000 anytime | | Form 8938 threshold (Single, abroad) | $200,000 year end or $300,000 anytime | | Form 8938 threshold (Married joint, abroad) | $400,000 year end or $600,000 anytime | | Form 8938 deadline | With your tax return (typically April 15, extendable) | | India US IGA | Model 1, signed 2014, operational from July 1, 2014 | | Streamlined compliance | 3 years amended returns, 6 years delinquent FBARs |
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Bottom Line for NRI Investors
If you are a US person with Indian bank accounts, demat accounts, mutual fund folios, insurance policies, or any other financial accounts or assets in India, you almost certainly need to file an FBAR, and you may also need to file Form 8938. The India US IGA means Indian financial institutions are already sharing your data with the IRS every year. Filing these forms is not about volunteering information the IRS does not have. It is about staying on the right side of a system that already tracks your accounts.
Track your account balances and asset values throughout the year, not just at year end. Convert to US dollars using the correct Treasury rates. File on time. Keep your records for at least five years. And if you have missed filings from previous years, look into the Streamlined Filing Compliance Procedures before the IRS comes looking.
Your Indian investments can be a powerful part of your wealth building strategy. Just make sure the paperwork keeps pace with the portfolio.