Many Indian-Americans living in the U.S. are unaware of their obligation to report foreign financial accounts-even if those accounts are in India and earn minimal or no income. Most CPAs and tax preparers overlook FBAR filing, putting taxpayers at serious risk of IRS penalties ranging from $10,000 to over $100,000.
At Kewal Krishan & Co, we’ve helped hundreds of Indian-origin taxpayers properly report their Indian bank accounts, fixed deposits, and demat holdings to avoid IRS scrutiny. With precise filings, we’ve helped avoid penalties and protected clients from potential audits.
IRS and FinCEN Code References
- 31 U.S. Code §5314 – Requirement to report foreign financial accounts
- IRC §6038D – Foreign asset reporting coordination with Form 8938
- FBAR regulations (31 CFR §1010.350) – Individuals must file FinCEN Form 114
- FinCEN Form 114 – Report of Foreign Bank and Financial Accounts (FBAR)
Who Must File FBAR?
You must file FBAR (FinCEN Form 114) if:
- You are a U.S. citizen, resident alien, green card holder, or meet the Substantial Presence Test; AND
- You have signature authority or financial interest in foreign financial accounts (e.g., Indian bank accounts, NRE/NRO/FCNR, demat, trading accounts); AND
- The aggregate maximum balance across all accounts exceeds $10,000 at any time in the year (even for one day)
Example:
If you have ₹4 lakh in SBI, ₹2 lakh in HDFC, and ₹3.5 lakh in ICICI Bank, totaling over $10,000 once during the year (say ₹10 = $1), FBAR must be filed.
What Accounts Must Be Reported?
- NRE/NRO/FCNR deposits
- Savings/current accounts in Indian banks
- Fixed deposits (FDs)
- Indian Demat accounts (with cash component)
- Joint accounts with parents/spouse in India
- PPF accounts (if held under PAN and accessible)
- Foreign pension/retirement schemes
- Trading accounts (Zerodha, Sharekhan, etc.)
- Accounts where you have power of attorney or signing authority
Example Case: Filing FBAR for Indian-Origin Taxpayer
Case Study:
Mr. Shah, on H-1B, has the following Indian accounts:
- SBI NRO Savings: ₹2.5 lakh
- HDFC FD: ₹5 lakh
- Zerodha Trading Account: ₹3 lakh
Total Peak Balance = ₹10.5 lakh = ~$12,600
Conclusion: FBAR must be filed.
Step-by-Step: How to File FBAR (FinCEN Form 114)
- Collect Account Information
- Account numbers, bank names, addresses, type of account, and peak balance during the year.
- Convert Indian Rupee to USD
- Use Treasury Department’s Year-End Exchange Rate for conversion (e.g., ₹1 = $0.01204 for 2024).
- Log in to BSA E-Filing Website
- Select Individual Filing Option
- Choose “No” for third-party filings unless CPA is e-filing on your behalf.
- Fill Form 114
- Enter personal details (SSN or ITIN), mailing address, and contact.
- Report each foreign account with max balance and bank address.
- Sign and Submit Electronically
- No paper submission; confirmation is instant.
- Save Submission Confirmation
- Retain BSA Filing Receipt Number and PDF copy.
When to File FBAR
- Due Date: April 15, 2025
- Automatic Extension: Until October 15, 2025 (no separate request needed)
- No penalties if filed correctly during extended period.
FBAR vs. Form 8938
| Feature | FBAR (FinCEN 114) | Form 8938 (IRS Form) |
|---|---|---|
| Filing Agency | FinCEN | IRS |
| Threshold | $10,000 aggregate | $50,000 (single), $100,000 (MFJ) |
| Filed With Return? | No – Filed separately | Yes – Attached to Form 1040 |
| Includes Demat? | Only if cash accounts exist | Yes, full reporting |
Common FBAR Mistakes to Avoid
- Not including joint accounts held with parents/spouse in India
- Reporting year-end balance instead of maximum balance
- Using wrong exchange rates (should use Treasury year-end)
- Believing that dormant or inactive accounts don’t need to be reported
- Thinking that NRE accounts are exempt (they are not)
Conclusion
Failing to file FBAR can lead to serious civil penalties, especially when account values cross $10,000. Many Indian-Americans are unaware of these rules and face sudden IRS notices, or worse-examinations.
Properly filing FinCEN Form 114 and coordinating with Form 8938, 8621, or 1040 ensures you remain compliant, and protect your financial reputation in the U.S.
Call to Action
Anshul Goyal, CPA EA FCA is a U.S.-licensed Certified Public Accountant, IRS-authorized Enrolled Agent, and expert in cross-border tax compliance. He helps Indian-Americans meet FBAR, FATCA, and IRS obligations while optimizing global tax strategies.
If you have Indian accounts and are unsure about reporting, we can help you become IRS-compliant before the IRS finds you first.
About Our CPA
Anshul Goyal specializes in helping Indian-origin taxpayers with foreign bank account compliance, FBAR filing, Form 8938 coordination, and Indian income disclosures. He has successfully represented clients during IRS audits and resolved high-risk reporting failures.
Disclaimer
This blog is intended for informational purposes only and does not constitute legal or tax advice. U.S. taxpayers with foreign accounts must assess their compliance obligations individually. Consult a qualified CPA or Enrolled Agent for professional guidance.
Top 5 FAQs
1. I have ₹8 lakhs in Indian FDs. Do I need to file FBAR?
Yes, if the total value of all foreign accounts exceeded $10,000 at any point.
2. Do PPF and NPS accounts need to be reported on FBAR?
PPF – Yes, if accessible. NPS – It depends on structure and control.
3. I didn’t earn any income from my Indian accounts. Still need to file?
Yes. FBAR is about balances, not income.
4. Can I file FBAR late without penalty?
If not willfully omitted, and filed before the October extension, penalties may be waived.
5. Are jointly held Indian accounts with family members reportable?
Yes, even if the funds are not legally yours, if you have access.