Indian PF, PPF & NPS Accounts
Most Indian-origin taxpayers living in the U.S. are unaware that their Indian retirement accounts like EPF, PPF, and NPS can trigger IRS reporting requirements. Their CPAs either overlook these accounts or incorrectly report them, leading to increased audit risk, FBAR penalties, and unnecessary taxation.
At Kewal Krishan & Co, we regularly work with U.S.-resident Indians to properly report these accounts, apply IRS treaty benefits, and avoid double taxation or penalties. Many taxpayers save thousands simply by filing the right forms.
IRS Codes and Forms Involved
- IRC §6038D – Foreign asset disclosure (Form 8938)
- IRC §6048 – Foreign trust reporting (Form 3520)
- 31 USC §5314 – Foreign bank account reporting (FBAR – FinCEN 114)
Relevant Forms:
- FinCEN Form 114 – For FBAR
- Form 8938 – Statement of Specified Foreign Financial Assets
- Form 3520 – Annual Return to Report Transactions with Foreign Trusts
- Form 1040 – U.S. Individual Income Tax Return
Are Indian Retirement Accounts Reportable?
| Account Type | Report on FBAR | Report on Form 8938 | Report on Form 3520 |
|---|---|---|---|
| EPF | Yes | Yes | Often Yes (foreign trust) |
| PPF | Yes | Yes | Yes (foreign trust) |
| NPS | Yes | Yes | No (if treated as pension) |
Note: IRS hasn’t officially ruled on EPF/PPF treatment, but prevailing guidance suggests foreign trust reporting is often applicable for PPF and EPF unless structured under employer retirement rules.
How to Determine Reporting Requirements
Step 1: Confirm Tax Residency
If you are a U.S. resident for tax purposes (green card or pass Substantial Presence Test), then all foreign financial accounts and assets must be disclosed.
Step 2: Identify Each Account’s Nature
- EPF (Employee Provident Fund): Employer-employee joint retirement savings – interest taxable yearly.
- PPF (Public Provident Fund): Government-backed tax-saving instrument – interest accrues tax-free in India.
- NPS (National Pension Scheme): Market-linked retirement plan – employer/employee contribution.
Step 3: Determine Filing Thresholds
| Filing Status | Form 8938 Threshold |
|---|---|
| Single | $50,000 (year-end) or $75,000 (any time) |
| MFJ | $100,000 (year-end) or $150,000 (any time) |
Step 4: Determine Maximum Account Values
Use U.S. Treasury INR-USD exchange rate to convert balances.
If aggregate value of foreign accounts exceeds $10,000 → FBAR required
Example Scenario
Ravi, an H-1B visa holder in Texas, has:
- ₹9 lakh in EPF
- ₹5 lakh in PPF
- ₹3 lakh in NPS
Total: ₹17 lakh = ~$20,400 (USD).
→ He must file FBAR, Form 8938, and likely Form 3520 for EPF & PPF.
→ Annual interest earned must be included on Form 1040 Schedule B.
Taxation Rules in the U.S.
| Account | U.S. Tax Treatment |
|---|---|
| EPF | Annual interest is taxable in U.S.; no 80C deduction |
| PPF | Interest is taxable in U.S. (even though exempt in India) |
| NPS | Contributions not deductible in U.S.; gains are taxed on distribution |
There is no tax-deferral benefit unless the account qualifies under treaty provisions (e.g., NPS as pension under Article 20 of U.S.-India Tax Treaty).
Step-by-Step Compliance
- Determine U.S. tax residency
- Collect account statements
- Calculate max balances (in USD)
- Report on:
- FinCEN Form 114 (if >$10,000 total)
- Form 8938 (if asset thresholds met)
- Form 3520 (for EPF, PPF if trust-like)
- Report income: Interest, growth, and employer contributions on Form 1040
Penalty Triggers
| Form | Penalty (Non-filing) |
|---|---|
| FBAR | $10,000+ per year (non-willful) |
| 8938 | $10,000 initial + $50/day up to $60,000 |
| 3520 | Greater of $10,000 or 35% of contribution/distribution |
Conclusion
Indian-origin taxpayers residing in the U.S. must take FBAR and FATCA reporting seriously, especially for Indian retirement accounts. These accounts can trigger multiple IRS forms and misreporting can lead to steep penalties-even for honest errors.
If you hold EPF, PPF, or NPS, it’s time to review your 2025 tax situation and ensure all foreign retirement accounts are properly reported.
Call to Action
Anshul Goyal, CPA EA FCA is a U.S. Certified Public Accountant and Enrolled Agent specializing in cross-border taxation for Indian-Americans. He helps ensure IRS compliance while minimizing your global tax exposure.
About Our CPA
Anshul Goyal assists individuals with Indian investments and U.S. tax residency. He regularly handles FBAR, FATCA, Form 8938, and foreign trust reporting for clients with complex India-U.S. asset structures.
Disclaimer
This article is intended for informational purposes only. U.S. tax rules on foreign accounts are complex and vary depending on facts. Always consult a licensed tax professional for specific guidance.
Top 5 FAQs
1. Do I have to report my Indian PPF even if it’s tax-free in India?
Yes. The IRS considers it a foreign financial asset, and interest may be taxable.
2. Is NPS exempt from reporting?
No. It must be reported on FBAR and Form 8938 if thresholds are met.
3. Do I need to file Form 3520 for EPF?
Yes, if your EPF is treated as a foreign trust due to employee control.
4. Can I ignore PPF if the balance is low?
No. If combined balances across accounts exceed $10,000, FBAR applies.
5. Can my CPA ignore these if income is not withdrawn?
No. IRS requires reporting of ownership, not just income.