How to File FBAR for Indian Mutual Funds Held in India

If your aggregate foreign financial accounts, including Indian mutual funds, bank accounts (NRE/NRO), and life insurance policies, exceeded $10,000 at any point during 2025, you are legally required to file an FBAR (FinCEN Form 114) in 2026. Unlike tax forms, the FBAR is a transparency report filed with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

Identifying Your “Reportable” Mutual Funds

Many NRIs mistakenly believe that only bank savings accounts go on an FBAR. However, the “F” in FBAR stands for Financial, which is a broad net:

• Mutual Funds & ETFs: Every fund held in a folio or a brokerage account must be included.
• Demat Accounts: If you hold stocks in a Demat account, the account itself is reportable.
• Cash-Value Insurance: Policies like LIC with a surrender value are also included in your $10,000 aggregate calculation.

Calculating the “High Water Mark”

The FBAR doesn’t care about your Dec 31 balance. It cares about the maximum value each account reached during the calendar year.

1. Find the Peak: Review your monthly statements for 2025. Identify the highest balance for each account.
2. Convert to USD: Use the Treasury Reporting Rates of Exchange specifically for December 31, 2025. Even if your fund hit its peak in July, you must use the year-end exchange rate for the conversion.
3. Aggregate: Add these maximum USD values together. If the sum is $10,000.01 or more, every single account must be reported, even those with $0 balances.

Filing Instructions for 2026

FBARs are filed electronically via the BSA E-Filing System. Do not mail a paper form to the IRS.

• Step 1: Visit bsaefiling.fincen.treas.gov.
• Step 2: Select “File FinCEN Form 114 Individually.”
• Step 3: Enter your personal information (SSN/ITIN, address).
• Step 4 (Part II): For each Indian mutual fund folio, provide:
  • Maximum Account Value (in USD).
  • Financial Institution Name (e.g., HDFC Mutual Fund).
  • Account Number (Folio number).
  • Address of the AMC (e.g., Mumbai, India).
• Step 5: Sign and submit. Save the confirmation ID; it is your only proof of compliance.

Deadlines and the “Willful” Penalty Trap

• Due Date: April 15, 2026.
• Automatic Extension: If you miss April, you have an automatic extension to October 15, 2026. No paperwork is needed for this extension.
• Penalties (2026 Rates): * Non-Willful: Up to $16,536 per violation (unintentional errors).
  • Willful: The greater of $165,353 or 50% of the account balance. The IRS is increasingly aggressive in 2026 regarding “quiet disclosures” (filing late without an amnesty program).

How KKCA Secures Your Status

FBAR errors often trigger audits for the much more dangerous Form 8621 (PFIC). We streamline this:

• Folio Consolidation: We group your various Indian folios to ensure the “Maximum Value” is accurately reflected without double-counting transfers between accounts.
• Exchange Rate Accuracy: We use the exact 2025 Treasury year-end rates to ensure your report matches IRS data-mining filters.
• Streamlined Catch-Up: If you missed FBARs for the last 3-6 years, we guide you through the Delinquent FBAR Submission Procedures to get you compliant with zero penalties (if non-willful).

Call to Action

Looking for personalized tax services about your specific tax situation? Please contact us. We are here to help you with your specific tax matters.

Frequently Asked Questions (FAQ)

Q: Do I report my PPF or EPF on the FBAR? A: Yes. Both the Public Provident Fund and Employee Provident Fund are considered “Foreign Financial Accounts” and must be reported if your total foreign assets exceed $10,000.

Q: My spouse and I have joint accounts. Do we file twice? A: You can file a Joint FBAR if all accounts are held jointly. If either of you has an individual account (like an HDFC folio in one name only), you must file separate reports.

Q: Does “Signature Authority” matter? A: Yes. If you can sign on your parents’ bank account in India, you must report that account on your FBAR, even if the money isn’t yours.

Disclaimer

This blog is intended for informational purposes only and does not constitute legal or tax advice. Please consult a qualified U.S. CPA or tax attorney for guidance specific to your situation.