🇮🇳2026 Tax Guide

US Expat Taxes in India: NRI Filing Guide

2026 guide to US tax obligations for Americans in India, NRIs with US ties, and Indian-Americans with income in India

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Source references checked September 24, 2026.

Tax Treaty

Since 1989

Local Tax Rate

AY 2026–27: ordinary-income slabs 0–30%; surcharge where applicable and 4% cess

Filing Deadline

Depends on tax year, return category and extension eligibility

US-India Tax Relationship

The IRS publishes the 1989 US–India income tax treaty and its technical explanation. For an eligible beneficial owner resident in the other treaty country, Article 10 generally caps source-country dividend tax at 15% when the owner is a company holding at least 10% of the payer’s voting stock, and 25% otherwise; special rules apply to US regulated investment companies, REITs and dividends attributable to a permanent establishment or fixed base.

For eligible beneficial owners resident in the other treaty country, Article 11 generally caps interest tax at 10% for loans granted by qualifying banks or similar financial institutions and 15% otherwise, subject to its exemptions and exceptions; the lower cap is not a general bank-deposit rate.

Article 12 generally sets a 15% cap for qualifying royalties and included services, with a 10% category for specified equipment royalties and related services; definitions, exclusions and permanent-establishment exceptions must be checked before applying either rate.

Article 13 permits both countries to tax capital gains under their domestic laws, except as provided in Article 8 for shipping and air transport; it does not create a general residence-only exemption for share sales.

Article 16 covers employment. Its short-stay exemption requires no more than 183 days in the relevant taxable year, a nonresident employer, and pay not borne by that employer’s local permanent establishment, fixed base or trade or business. The article also has special occupational rules; the Article 1 saving clause preserves taxation of citizens and residents, subject to its listed exceptions.

Article 20 addresses qualifying periodic private pensions and annuities, subject to treaty residence and the Article 1 saving clause. Government-service pensions and social security or other public pensions have separate rules; a lump-sum withdrawal does not qualify as a periodic pension under Article 20.

For dual-resident individuals, Article 4 applies successive tests: permanent home, closer personal and economic ties, habitual abode, nationality, then competent-authority agreement where necessary.

Article 24 contains limitation-on-benefits rules for persons other than individuals, with alternative qualifying routes; entity claims require review of the applicable ownership, payment and business conditions.

SSA’s published list does not include a US–India totalization agreement; review social security coverage separately from income tax.

Sources for the reviewed topics — read September 24, 2026

Key Tax Considerations for India

NRI Status Complexity

Determine Indian and US tax status separately. US citizens and resident aliens generally remain taxable on worldwide income. Indian nonresident status does not automatically exempt every overseas payment: review where income arises and is received, including deemed-source and deemed-receipt rules.

PPF & EPF Reporting

Keep PPF and EPF statements, plan terms, employer and employee contribution records, and prior US returns. Determine US tax classification and any amounts already taxed before calculating income or distributions. Assess FBAR and Form 8938 separately under their ownership, asset and threshold rules. If foreign-trust rules apply, check the Form 3520 exceptions before deciding which trust returns are required.

Rental Property in India

Indian residential rental income generally belongs on Schedule E for a US individual owner; substantial tenant services or other special circumstances can change the form. US depreciation of a building in India generally requires the Alternative Depreciation System (ADS). Establish the depreciable basis, exclude land and check when the property was placed in service. Indian withholding is not automatically a fully creditable US tax: reconcile the legal liability and any refund entitlement first.

For the credit calculation and records to gather, read our Foreign Tax Credit and Form 1116 guide.

Gift Tax Differences

For Indian tax years governed by the Income-tax Act, 2025, Section 92 applies different valuation rules to money, immovable property and other specified property received without or for inadequate consideration. Exceptions include specified relatives, an individual’s marriage and inheritance; check the statutory definitions and transaction facts. Separately, US foreign-gift reporting depends on the donor category and related-party aggregation. The $100,000 threshold applies to qualifying foreign-individual or estate gifts, not every foreign donor, and special trust and covered-expatriate rules can apply.

PFIC Risk for Indian Mutual Funds

Review each Indian fund’s US entity classification and passive-income or asset tests before determining PFIC status. If PFIC rules apply, reporting and tax treatment depend on ownership, distributions, disposals, elections and exceptions. A broker’s location or product label alone does not establish the result.

NPS (National Pension System) Reporting

Review NPS plan terms, contribution history and the proposed withdrawal or annuity arrangement before applying US pension or trust rules. A foreign pension distribution may be partly taxable, and treaty treatment depends on payment type, residence and the saving clause. Check account reporting and any trust-reporting exception separately. Indian tax treatment must be confirmed for the relevant withdrawal and tax year.

Old vs New Tax Regime Choice

For AY 2026–27, eligible individuals can compare the default new regime with the old regime, taking account of the deductions they actually qualify for and the rules for opting out. Nonresidents cannot claim the resident-only Section 87A rebate. Higher Indian tax does not necessarily produce a larger usable US foreign tax credit: the US credit limit still applies.

No US-India Totalization Agreement

India is not on SSA’s published list of totalization agreements. US citizens and residents working for themselves abroad generally remain subject to US self-employment tax under the usual rules, and the foreign earned income exclusion does not remove that tax. Review the employment arrangement and each country’s coverage rules before estimating contributions.

PAN Card Requirement

A valid PAN is generally required when receiving payments subject to Indian TDS, with specified nonresident exceptions. Under section 397(2) of the Income-tax Act, 2025, failure to provide it generally requires the higher of the applicable statutory rate, the rates in force or 20%, with special rules for specified payments. This is not an automatic doubling. Existing PAN numbers remain valid under the new Act.

US State Tax After Moving to India

Review state residence and income sourcing separately from the federal return. California taxes part-year residents on worldwide income during residency and California-source income during nonresidency; an employment-related overseas safe harbor may apply. New York considers domicile and statutory residence, and nonresidents may still owe tax on New York-source income. Moving to India alone does not settle either analysis: retain move dates, travel records, home and employment details.

US Tax Forms to Assess

Form 1040

US Individual Tax Return

US citizens and resident aliens abroad generally follow the same filing rules as those in the US. Whether a return is required depends on income, filing status, age and other applicable filing rules. Include taxable worldwide income and report US return amounts in US dollars.

Form 2555

Foreign Earned Income Exclusion

For US tax year 2026, qualifying individuals may exclude up to $132,900 of foreign earned income, with a reduced limit for part-year qualification. A foreign tax home is required, together with an applicable bona fide residence test or at least 330 full days in foreign countries during 12 consecutive months. The exclusion must be claimed on a return; it is not automatic. Compare eligible exclusion and credit treatment using the actual return, without crediting tax attributable to excluded income.

When to assess: 2026 maximum $132,900 per qualifying person; part-year limits apply

Form 1116

Foreign Tax Credit

Form 1116 generally calculates the credit for qualifying foreign income taxes paid or accrued, subject to the US credit limit. Indian TDS is not automatically creditable in full: check the actual legal liability, treaty limits and any refund entitlement. Taxes attributable to income excluded under the foreign earned income exclusion cannot also be credited.

When to assess: Qualifying foreign tax, subject to the applicable credit limit

FBAR (FinCEN 114)

Foreign Bank Account Report

A US person generally files an FBAR when foreign financial accounts over which they have a financial interest or signature or other authority exceed $10,000 in aggregate at any time during the calendar year. Count reportable accounts across all foreign countries, not just India, and check applicable exceptions. File separately through FinCEN’s BSA E-Filing system; the April 15 deadline has an automatic extension to October 15.

When to assess: More than $10,000 in aggregate foreign financial accounts at any time during the calendar year

Form 8938

FATCA Statement of Foreign Financial Assets

Form 8938 covers specified foreign financial assets when the applicable filing conditions and value threshold are met. For individuals using the higher overseas thresholds, a foreign tax home and the IRS presence-abroad test are required. Filing status also matters. If you are not required to file an income tax return, Form 8938 is not required. This form does not replace the FBAR.

When to assess: Qualifying abroad: over $200,000 year-end or $300,000 anytime for unmarried/separate filers; over $400,000 or $600,000 for joint filers

Form 3520

Foreign Trust/Gift Reporting

Form 3520 covers certain foreign gifts or bequests and specified foreign-trust transactions or ownership. Gift thresholds depend on the donor’s classification and related-party aggregation. Trust reporting has separate rules and exceptions; an Indian account’s name alone does not determine its treatment. File Form 3520 separately from the income tax return when required.

When to assess: Over $100,000 for qualifying foreign-individual/estate gifts; different rules for entity gifts and trusts

Form 8621

PFIC Annual Information Return

US shareholders generally file separately for each PFIC when the reporting rules apply. Check direct and indirect ownership, distributions, gains, elections and annual-reporting exceptions; a Part I exception does not necessarily remove other reporting requirements.

When to assess: PFIC ownership and reporting triggers, subject to applicable exceptions

Form 8833

Treaty-Based Return Position

Form 8833 discloses treaty-based return positions when reporting is required. IRS instructions waive reporting for certain positions, including some individual employment and pension claims; other specifically reportable positions remain subject to disclosure. Check the applicable exception and dual-resident rules before filing. A reporting waiver does not itself establish eligibility for a treaty benefit.

When to assess: Reportable treaty positions, subject to IRS exceptions

Illustrative Filing Scenarios

Tech Worker Relocated to Bangalore

Illustrative situation: a US citizen moves to India for a technology job, retains a US retirement account, has Indian bank accounts and receives a property gift from parents. Account designation and reporting require review after the move.

Issues to review: Start with the move dates, payroll, bank-account records and property-gift documents. Determine each return and information-reporting requirement from the actual facts. Compare eligible foreign earned income exclusion and foreign tax credit treatment, taking account of any existing exclusion election. Review the Indian fund holdings and gift details before selecting forms; this example does not establish that every account or investment requires the same filing.

Software Engineer Comparing Indian Tax Regimes

Illustrative situation: a US green card holder works for an Indian IT company in Bangalore, has employer retirement contributions and Indian bank accounts, and needs to compare the Indian tax regimes. Use actual payroll and account records before calculating either return.

Issues to review: Confirm residence, the relevant tax year, taxable salary components and documented deductions before comparing the Indian regimes. Then calculate the US return and foreign tax credit separately. A higher Indian tax bill does not by itself establish a zero US balance or a usable carryforward; qualifying tax, the credit limit and treaty rules must be checked.

NRI with Rental Property in Mumbai

Illustrative situation: a US citizen owns a rented apartment in Mumbai and also has Indian bank accounts and US employment income. Establish Indian residence status and the applicable withholding obligations before calculating the two returns.

Issues to review: Prepare the US rental calculation from actual rent, expense and property records. Separate land from the depreciable building basis and establish the placed-in-service date. For residential rental buildings in India subject to ADS, the recovery period is generally 30 years if placed in service after 2017, or 40 years for earlier property; review any applicable special rules. Calculate the qualifying Indian income tax separately from the amount withheld: a refundable or otherwise noncompulsory payment does not become creditable merely because it was deducted from rent.

Retiree with PPF, EPF, and Indian Pension

Retired US citizen living in the US, has matured PPF account, EPF balance from former Indian employer, and receives monthly pension from a private Indian company.

Issues to review: Review the PPF and EPF plan documents, contribution history, amounts previously taxed and withdrawal records before calculating US tax or deciding which information returns apply. A foreign pension distribution can be partly taxable rather than automatically taxable in full. For a private Indian pension, distinguish periodic payments from a lump sum and check treaty residence and the saving clause. If India withholds more than the treaty permits, pursue the applicable Indian relief procedure; excess withholding generally cannot simply be claimed as a US foreign tax credit.

Indian-American with Inherited Property

US citizen inherited property and bank accounts from parents in India, receives rental income.

Issues to review: Confirm whether the bequest meets the foreign-gift reporting threshold and whether any special donor or trust rules apply. Obtain estate documents and a property valuation: inherited-property basis is generally tied to date-of-death value, but alternate valuations and other exceptions can apply. Keep rental, expense and sale records for the separate tax calculations, and assess inherited-account reporting under the applicable FBAR and Form 8938 rules.

Green Card Holder Returning to India

Living in India but maintaining Green Card, has US investments, Indian salary and PF contributions.

Issues to review: Moving to India does not by itself end US tax residence under the green card test. Establish the applicable residency-ending date and any treaty position before deciding how to file. Before abandoning permanent residence or claiming foreign treaty residence, review whether the long-term-resident expatriation rules and Form 8854 apply. Covered-expatriate status depends on the applicable tax-liability, net-worth and compliance-certification tests, subject to exceptions; green card duration alone does not determine an exit-tax bill.

Cross-Border Planning Considerations

Treaty withholding limits depend on income classification and eligibility under the applicable article.
Indian nonresident status limits the tax base, but source, receipt and deemed-income rules still need checking
Article 20 provides pension rules subject to payment classification, treaty residence and the saving clause.
Article 4 provides a sequence for determining an individual’s treaty residence.
Qualifying Indian income tax may reduce US tax through the foreign tax credit, within its limits.
Articles 21 and 22 provide conditional student/apprentice and teaching/research relief. Check prior residence, the purpose and length of the visit, the payment source and the saving clause; a temporary stay alone does not establish eligibility.
Check your own Form 8938 and FBAR requirements separately; each form has its own scope and thresholds.
US-dollar reporting requires the applicable exchange rates for income, expenses and taxes; currency movements alone do not establish a lower US tax bill.
Section 92(3) excludes inheritances from its Indian gift-income provision; assess US foreign-bequest reporting separately rather than assuming cross-border estate planning is tax-free or simple.
For AY 2026–27, download Form 26AS and AIS from the e-filing portal and reconcile the reported TDS against your records.

Watch Out For

PPF and EPF require US classification and tax-history review.
If foreign-trust rules apply, check reporting obligations and available exceptions.
Potential PFIC reporting and tax consequences require fund-specific review.
Multiple PFIC holdings can require separate forms.
Complex Indian TDS system (multiple rates, multiple sections) complicates FTC calculations on Form 1116
Keep dated rupee amounts and the exchange rates used for the US-dollar property calculation.
Different fiscal year (India: April 1 - March 31 vs US: Jan 1 - Dec 31) requires careful income allocation
For Hindu Undivided Family (HUF) arrangements, review ownership and activities under US entity-classification rules; Indian legal recognition alone does not determine US tax treatment.
No US–India totalization agreement is listed by SSA; check potential dual coverage.
Review state residency, any applicable overseas exception and state-source income after relocating to India

Frequently Asked Questions

Is my Indian PPF account tax-free in the US?

Do not assume an Indian account’s domestic tax treatment determines its US treatment. For a PPF account, review the plan terms, US classification and prior reporting before deciding when income is taxable. Separately assess FBAR, Form 8938 and any foreign-trust reporting requirements or exceptions; a filing exemption does not by itself establish an income-tax exemption.

How do I report NRE and NRO accounts?

Assess NRE and NRO accounts under the same US foreign-account rules as other qualifying accounts. FBAR generally applies to US persons with a financial interest in, or signature authority over, foreign accounts whose aggregate value exceeds $10,000 during the calendar year, subject to exceptions. Form 8938 has separate ownership, filing and value requirements; one form does not replace the other. US citizens and resident aliens generally report taxable account interest even where India exempts it. Indian withholding is not automatically creditable in full: check the legal tax liability and any available refund.

My parents want to gift me property in India. What are the US tax implications?

For a US recipient, gifts from nonresident alien parents generally require Form 3520 when the related-party aggregate exceeds $100,000 during the tax year. A genuine gift is generally excluded from income, but covered-expatriate and trust rules need separate review. Retain the donor’s adjusted basis, the property’s value at the gift date and any gift-tax records: gain and loss basis can differ. A later sale requires its own tax calculation.

Does my NRI status affect my US taxes?

Indian nonresident status does not by itself remove US tax obligations. US citizens and resident aliens generally remain subject to US tax on worldwide income. Determine Indian residence separately under the applicable tax-year rules before assessing Indian tax and possible double-tax relief.

Does India tax NRI foreign income?

Not every overseas payment is automatically exempt. Section 5 of the Income-tax Act, 2025 includes income received or deemed received in India, and income arising or deemed arising in India, in a nonresident's tax base, subject to the Act. Review the source and receipt facts before concluding that foreign income is outside Indian tax.

What is the DTAA benefit for NRI?

NRI status alone does not establish entitlement to US–India treaty benefits. First identify treaty residence and the income category, then check the applicable article and any saving-clause exception. Employment is addressed in Article 16 and private pensions in Article 20. Reduced withholding and double-tax relief depend on the relevant conditions; they do not guarantee that no tax remains payable.

Are Indian mutual funds taxable in US?

Indian fund holdings require US tax classification review. Under section 1291, gains and excess distributions are allocated across the holding period: current-year and pre-PFIC portions are ordinary income, while prior PFIC-year portions face separate tax and interest. This is not a universal flat-rate calculation. QEF and mark-to-market elections have eligibility and timing requirements.

Do I need a PAN card as a US citizen in India?

US citizenship does not by itself settle your Indian PAN obligations. Check your filing and transaction requirements and, for payments subject to TDS, whether a prescribed nonresident exception applies. Missing a PAN does not automatically double withholding. Use the application form applicable to your citizenship and entity type under the current rules; an existing PAN remains valid.

Which ITR form should NRI file?

For AY 2026–27, a nonresident individual without business or professional income generally uses ITR-2; business or professional income generally requires ITR-3. ITR-1 is not available to nonresidents. Check the instructions for the applicable assessment year and your income categories before selecting the return.

Is there a Social Security agreement between US and India?

SSA’s published agreement list does not include India. Whether you owe contributions in one or both countries depends on coverage under each system and your employment arrangement. Self-employed US citizens and residents generally follow the US self-employment tax rules even when living abroad; claiming the foreign earned income exclusion does not eliminate that tax.

What are the Indian income tax slabs for AY 2026–27?

For AY 2026–27, the new-regime ordinary-income bands are: nil through INR 4 lakh; 5% on the portion above 4–8 lakh; 10% above 8–12 lakh; 15% above 12–16 lakh; 20% above 16–20 lakh; 25% above 20–24 lakh; and 30% above 24 lakh. Special-rate income requires separate treatment. Surcharge may apply, and 4% cess applies to income tax plus surcharge. The Section 87A rebate is restricted to eligible resident individuals; nonresidents cannot claim it. Compare the old regime using your eligible deductions rather than assuming either regime is always cheaper.

What is the TDS rate for NRI rental income?

Do not apply 31.2% as a universal NRI rental-withholding rate. Under section 393(2), table item 17, of the Income-tax Act, 2025, the applicable rule for other chargeable sums paid to non-residents refers to rates in force; determine the rate applicable to the payment and tax year. Missing a PAN does not automatically double rental withholding; the applicable higher-rate rule and any available exception must be checked. For AY 2026–27, Form 26AS is a statement showing tax deducted or collected at source; it is not the form used to deposit the payment. Reconcile tax deducted with the return calculation before determining any refund. For AY 2026–27, ITR-2 covers eligible individuals without business or professional income; business or professional income can require ITR-3. For US purposes, first determine the actual legal Indian income-tax liability and any refund entitlement. The amount withheld is not automatically the qualifying foreign tax.

How do I claim FTC for Indian taxes paid?

Reconcile Indian withholding and tax payments with your actual legal tax liability, available refunds and treaty limits before calculating a US foreign tax credit. Form 1116 generally applies, although a limited exception permits certain passive-income taxpayers to claim without it. The credit is limited; qualifying unused taxes may be eligible for a one-year carryback and ten-year carryforward. Taxes on income excluded under the foreign earned income exclusion cannot also receive a credit. Retain the records supporting the income, tax and any later refund or reassessment.

What is the difference between NRE and NRO accounts?

NRE and NRO are both rupee accounts with different eligibility, permitted credits and remittance rules. NRE balances are repatriable; NRO rules distinguish current-income remittances from the conditional USD 1 million per April–March financial-year facility for eligible NRIs/PIOs, shared with other eligible assets. NRE interest exemption in India depends on FEMA residence or RBI permission and the account conditions; it is not established by the account label alone. Ask the bank to review account designation when returning to India for employment or changing residence. Neither account label removes US income or information-reporting obligations where the applicable rules require them.

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