Rajesh, an NRI software engineer in California, received an urgent email from his Indian mutual fund company. His account was frozen due to incomplete FATCA and CRS declarations. He had invested 10 lakh rupees six months ago, but now he couldn't access his funds or make new investments.
This scenario happens to thousands of NRIs every year who don't understand their cross-border tax reporting obligations. If you're an NRI in the US investing in India, understanding FATCA CRS reporting isn't optional anymore. It's a legal requirement that affects your ability to invest, avoid penalties, and maintain financial accounts in both countries.
Key Takeaway
Here's everything you need to know about FATCA and CRS compliance as an NRI in the US.
- FATCA and CRS are international tax compliance frameworks that require financial institutions to report account information to prevent tax evasion
- US-based NRIs must file Form 8938 if their foreign financial assets exceed $50,000 (living in US) or $200,000 (living abroad) at year-end
- FBAR filing is separate from FATCA with a lower $10,000 threshold for foreign bank accounts, filed through FinCEN, not the IRS
- Indian financial institutions require FATCA/CRS self-declarations before allowing NRIs to invest in mutual funds, stocks, or open bank accounts
- Non-compliance carries severe penalties ranging from $10,000 to $50,000 in the US, plus account freezes and 5,000 rupees penalties per account in India
What is FATCA and How Does it Affect NRIs?
FATCA stands for Foreign Account Tax Compliance Act, a US federal law enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. The primary goal is preventing US taxpayers from hiding assets in foreign countries to evade taxes.
For NRIs living in the US, FATCA creates reporting obligations in two directions. First, you must report your Indian investments and accounts to the IRS if they exceed certain thresholds. Second, Indian financial institutions must collect information about your US tax status and report it to Indian tax authorities, who then share it with the IRS.
Understanding FATCA: The Basics
FATCA requires foreign financial institutions, including Indian banks and mutual fund companies, to identify accounts held by US persons. These institutions must report account balances, income earned, and other financial details to their local tax authority. India signed an Inter-Governmental Agreement (IGA) with the US on July 9, 2015, making FATCA compliance mandatory for all Indian financial institutions.
The mechanism works through automatic information exchange. When you open an NRE account or invest in Indian mutual funds, the institution collects your FATCA self-declaration. This information flows from the financial institution to the Central Board of Direct Taxes (CBDT) in India, which then transmits it to the IRS.
Who Qualifies as a "US Person" Under FATCA?
Understanding whether you're a US person determines your FATCA obligations. You qualify as a US person if you are a US citizen, regardless of where you live. This includes people born in the US who now live in India. US green card holders are also considered US persons, even if they spend most of their time outside America.
Tax residency also matters. If you meet the substantial presence test by being physically present in the US for at least 31 days during the current year and 183 days during a three-year period, you're treated as a US person. Domestic partnerships and corporations organized in the US also fall under this category.
Certain visa holders have exemptions. Teachers and students on J-1 or Q visas are classified as non-resident aliens for their first two years and are exempt from the substantial presence test during this period.
Which Indian Investments Fall Under FATCA?
FATCA covers a broad range of financial accounts and assets in India. Your NRE, NRO, and FCNR bank accounts all require FATCA reporting. These NRE vs NRO vs FCNR accounts have different features, but all fall under FATCA requirements.
Mutual fund investments and equity holdings in Indian companies must be reported. Fixed deposits, recurring deposits, and Public Provident Fund (PPF) accounts are included. Life insurance policies with cash value and pension plans like the National Pension System (NPS) also fall under FATCA.
Some assets don't require FATCA reporting. Physical assets like jewelry, art, antiques, and cars are excluded. Real estate property that you directly own (not through a partnership or company) doesn't need reporting. Safety deposit boxes and foreign currency you hold physically outside financial institutions are also exempt.
What is CRS and Why Do NRIs Need to Know About It?
CRS stands for Common Reporting Standard, an international framework developed by the Organisation for Economic Co-operation and Development (OECD). Unlike FATCA which is US-specific, CRS creates a global automatic exchange of financial account information among participating countries.
India joined CRS as an early adopter on June 3, 2015, as part of the G-20 countries commitment. This means Indian financial institutions must identify account holders who are tax residents of other CRS participating countries and report their information.
CRS vs FATCA: Key Differences
While both frameworks aim to prevent tax evasion, they have distinct differences. FATCA applies only to US persons and is a US law. CRS applies to tax residents of over 100 participating countries and is a multilateral agreement.
FATCA has a reporting threshold of $50,000 for most filers. CRS has no minimum reporting threshold, meaning all account balances must be reported regardless of size. FATCA requires US taxpayers to file Form 8938 with the IRS. CRS requires only a self-declaration to your financial institution, no separate filing to tax authorities.
The reporting mechanism differs too. Under FATCA, Indian institutions report to CBDT, which forwards information to the IRS. Under CRS, Indian institutions report to CBDT, which exchanges information with tax authorities in the account holder's country of tax residence through automatic exchange channels.
India's CRS Implementation for NRIs
Indian financial institutions must conduct due diligence to determine the tax residency of all account holders. When you open a new account or investment, you'll be asked to complete a CRS self-certification form. This form collects your country of tax residence and Tax Identification Number (TIN) from that country.
For NRIs, this typically means declaring your country of residence outside India. If you're living in Canada and investing in India, you'd declare Canada as your tax residence and provide your Canadian TIN. The Indian institution then reports your account information to Indian tax authorities, who share it with Canadian tax authorities.
The information reported includes your name, address, country of tax residence, TIN, account balance, and income earned. Joint account holders must each complete separate CRS declarations.
Which Countries Are Part of CRS?
Over 100 jurisdictions have committed to CRS implementation. Major countries include Canada, the United Kingdom, Australia, Singapore, UAE, and most European nations. The United States is notably absent from CRS because it has its own system through FATCA.
For NRIs, this means if you're a tax resident in any CRS participating country (except the US), you must complete CRS declarations when investing in India. Tax authorities in your country of residence will automatically receive information about your Indian accounts and investments.
What Forms Do NRIs Need to File?
NRIs in the US face multiple reporting requirements across different authorities. Understanding which forms apply to your situation prevents costly mistakes and penalties.
Form 8938: Statement of Specified Foreign Financial Assets
Form 8938 is the primary FATCA reporting form for US taxpayers. You file this form with your annual federal income tax return (Form 1040). The form requires you to list all specified foreign financial assets that exceed the reporting threshold.
Specified foreign financial assets include foreign bank accounts, foreign stocks and securities not held in US financial institutions, partnership interests in foreign entities, and foreign pension plans. The form requires detailed information including the financial institution's name and address, account number, maximum value during the year, and any income earned.
Form 8938 is due on the same date as your tax return, typically April 15, with automatic extensions available until October 15 if you file for a tax extension. You must file electronically if you e-file your tax return, or attach a paper copy if you file by mail.
FBAR (FinCEN Form 114): Foreign Bank Account Report
FBAR is a separate reporting requirement under the Bank Secrecy Act, not part of FATCA but often confused with it. You must file FBAR if the aggregate value of your foreign financial accounts exceeds $10,000 at any time during the calendar year.
FBAR covers foreign bank accounts, brokerage accounts, mutual funds, and certain retirement accounts. Unlike Form 8938, FBAR is not filed with the IRS. You file it electronically through the Financial Crimes Enforcement Network (FinCEN) BSA E-Filing System.
The filing deadline is April 15, with an automatic extension to October 15 without needing to request it. FBAR requires less detailed information than Form 8938 but has stricter penalties for non-compliance. You report the maximum account value during the year in US dollars.
FATCA/CRS Self-Declaration Forms in India
When you open accounts or invest in India, financial institutions require FATCA and CRS self-declaration forms as part of your KYC process. These are not filed with tax authorities but submitted directly to the bank or mutual fund company.
The self-declaration form collects information about your citizenship, tax residency, place of birth, and Tax Identification Number. US citizens must indicate the United States as their country of tax residence even if they've returned to India and are now Indian residents.
You can submit these forms online through the institution's portal or offline at branch offices. For mutual funds, you can use centralized KYC registration agencies like CAMS or Karvy. The form typically requires an OTP verification using your PAN number.
What Are the Filing Thresholds for NRIs in the US?
Understanding the specific dollar thresholds determines whether you must file. The thresholds vary based on your location and filing status.
Form 8938 Thresholds Based on Your Situation
If you live in the United States, the thresholds are lower. Single filers or married filing separately must file if foreign assets exceed $50,000 on the last day of the tax year, or $75,000 at any time during the year. Married couples filing jointly must file if assets exceed $100,000 on the last day or $150,000 at any time during the year.
If you live abroad, you get higher thresholds. You're considered living abroad if you're a US citizen whose tax home is in a foreign country and you've been present in a foreign country for at least 330 days during a 12-month period. Single filers abroad must file if assets exceed $200,000 on the last day or $300,000 anytime. Married couples filing jointly abroad must file if assets exceed $400,000 on the last day or $600,000 anytime.
These thresholds apply to the aggregate value of all your specified foreign financial assets combined, not per account. You must convert foreign currency amounts to US dollars using the year-end exchange rate published by the IRS.
FBAR Thresholds: The $10,000 Rule
FBAR has a single, straightforward threshold of $10,000. If the aggregate maximum value of all your foreign financial accounts exceeds $10,000 at any point during the calendar year, even for just one day, you must file FBAR.
This threshold applies regardless of where you live or your filing status. The $10,000 limit hasn't changed since FBAR was introduced, making it easier to trigger than Form 8938. Many NRIs with modest investments in India find themselves needing to file FBAR even if they don't meet the Form 8938 threshold.
Calculate the aggregate value by adding the maximum balances of all foreign accounts during the year. You don't need to combine account balances on the same day. Use the maximum value each account reached at any point during the year.
Real-World Scenarios: Do You Need to File?
Let's look at practical examples to clarify when filing is required.
Scenario 1: Priya lives in Texas and is single. She has an NRO account with a maximum balance of 15 lakh rupees (approximately $18,000) during the year. She doesn't have any other foreign accounts or assets.
Priya must file FBAR because her account exceeded $10,000. She doesn't need to file Form 8938 because her assets didn't reach $50,000 at year-end or $75,000 at any time.
Scenario 2: Amit and Meera are married and file jointly. They live in California. Amit has an NRE account with 25 lakh rupees ($30,000) and Meera has mutual fund investments worth 30 lakh rupees ($36,000). Their combined maximum value was $66,000 during the year, and year-end value was $63,000.
They must file FBAR because their combined accounts exceeded $10,000. They don't need to file Form 8938 because their combined assets didn't reach $100,000 at year-end or $150,000 at any time during the year.
Scenario 3: Vikram works in Dubai but is a US green card holder. He has investments in India worth 1.8 crore rupees (approximately $216,000) at year-end, which peaked at 2 crore rupees ($240,000) mid-year.
Vikram must file both FBAR and Form 8938. His accounts exceed $10,000 (FBAR requirement), and because he lives abroad, his assets exceed the $200,000 year-end threshold for Form 8938.
How to Complete FATCA and CRS Declarations in India?
Completing your FATCA and CRS declarations properly ensures your Indian investments remain accessible and compliant. Here's the step-by-step process.
Step 1: Gather Required Documents
Before starting your declaration, collect all necessary documents. You'll need your PAN card, which is mandatory for any financial transaction in India. Your passport serves as proof of citizenship and identity. Keep your overseas address proof ready, such as a utility bill, bank statement, or residence certificate from your current country.
Your Tax Identification Number is critical. For US taxpayers, this is your Social Security Number or Individual Taxpayer Identification Number (ITIN). If you're a tax resident in another country under CRS, provide that country's TIN. Keep details of your existing Indian financial accounts handy, including account numbers and institution names.
For NRE, NRO, or FCNR accounts, have your bank account statements showing recent transactions. If you're investing in mutual funds, keep your folio numbers accessible. Employment details including your occupation and gross annual income range will be required.
Step 2: Fill Out the Self-Declaration Form
The FATCA/CRS self-declaration form is typically provided by your financial institution during account opening or investment. The form contains several sections that must be completed accurately.
Section 1 covers personal information including your name as per PAN, date of birth, and father's name. Provide your current residential address abroad with complete details including street, city, state, and country.
Section 2 addresses tax residency. You must declare all countries where you're considered a tax resident. For US green card holders or citizens, you must select "United States" even if you don't currently live there. Provide your TIN (SSN or ITIN) in the designated field.
Section 3 asks about your place and country of birth. US-born individuals must indicate "United States" even if they're now Indian citizens or OCI holders. This is a key identifier for FATCA purposes.
Section 4 covers your occupation and gross annual income range. Select from the provided ranges honestly, as this information is verified against other financial data.
Section 5 is the self-certification statement. By signing, you confirm that all information provided is true and accurate. You acknowledge that providing false information can result in penalties and account restrictions.
Step 3: Submit to Your Financial Institution
Once completed, submit the form through your institution's preferred channel. Most banks and mutual fund companies offer online submission through their customer portals. Log in with your credentials, navigate to the KYC or FATCA/CRS section, and upload scanned copies of your completed form and supporting documents.
For offline submission, visit the nearest branch with your completed form and original documents. The institution will verify your documents and provide acknowledgment of receipt. Some institutions require you to complete the form in their presence.
For mutual fund investments, you can use Registrar and Transfer Agencies like CAMS (Computer Age Management Services) or KFintech. These centralized platforms allow you to update KYC for multiple mutual funds at once. Visit their website, complete the online form, and verify using OTP sent to your registered mobile number.
Keep acknowledgment receipts and reference numbers for your records. The institution typically processes your submission within 7-15 working days. You'll receive confirmation once your KYC is updated.
What Information You Need to Provide
The standard information required includes your full name matching your PAN card, permanent and current addresses, nationality and citizenship status, and tax residency details for all applicable countries. Your TIN from each country of tax residence is mandatory.
For joint accounts, each holder must complete a separate declaration. Provide relationship details and TIN for all joint holders. If you're a controlling person in an entity (company or partnership), additional information about the entity and your control percentage is required.
Update this information within 30 days if there are any changes. Moving from the US to India, changing citizenship status, or acquiring new tax residency in another country all require immediate updates to your FATCA/CRS declarations.
What Happens If You Don't Comply?
Non-compliance with FATCA and CRS carries serious consequences on both the US and Indian sides. Understanding these penalties emphasizes why proper compliance matters.
US Penalties for Not Filing Form 8938
The initial penalty for failing to file Form 8938 is $10,000. This penalty applies even if you don't owe any additional tax. If you don't file within 90 days after the IRS mails you a notice of failure to file, an additional $10,000 penalty is assessed for each 30-day period the failure continues.
The maximum penalty for continued failure to file can reach $50,000. This is separate from any tax penalties. If you have underpayment of tax attributable to non-disclosed foreign financial assets, you face an additional 40% penalty on the underpayment amount.
The statute of limitations is also extended. Normally, the IRS has three years to assess additional taxes. If you fail to file Form 8938 or fail to properly report an asset, the statute extends to six years for the entire return. If you omit more than $5,000 of income related to foreign assets, the statute extends to six years for your entire tax return.
FBAR Penalties: What You Risk
FBAR penalties are typically more severe than Form 8938 penalties. For non-willful violations (mistakes made without intent to evade taxes), the penalty can be up to $16,536 per violation. Some cases treat this as per report, others per account, depending on the circumstances.
Willful violations carry much harsher penalties. The penalty is the greater of $165,353 or 50% of the account balance at the time of the violation, assessed per account. If you have five accounts and willfully fail to report them, you could face penalties on each account.
Criminal penalties can apply in severe cases. Willful failure to file FBAR can result in up to $250,000 in fines or five years imprisonment, or both. If FBAR violations occur along with other tax crimes, penalties can reach $500,000 and ten years imprisonment.
The IRS does offer relief programs for taxpayers who come forward voluntarily. The Streamlined Filing Compliance Procedures allow eligible taxpayers to catch up on late filings with reduced penalties if the failure was non-willful.
India-Side Penalties for Incomplete FATCA/CRS
Indian financial institutions face penalties for not reporting or providing inaccurate information, which they can recover from account holders. The Income Tax Department can levy a penalty of 50,000 rupees on financial institutions for not furnishing correct statements.
Recent budget changes introduced a direct penalty on account holders. If you provide false or inaccurate information in your FATCA/CRS self-certification, you can be penalized 5,000 rupees per account per year. This applies separately to each financial institution where you hold accounts.
If you have three bank accounts, five mutual fund investments, and two insurance policies, providing inaccurate information could result in penalties of 50,000 rupees (10 accounts × 5,000) annually. The penalty applies each year the inaccurate information remains in the system.
Your accounts can be frozen until you complete proper FATCA/CRS declarations. Banks and mutual fund companies have the legal right to restrict transactions on accounts with incomplete KYC. You won't be able to make new investments, redeem existing investments, or sometimes even access your funds until compliance is restored.
Real Cost of Non-Compliance
Beyond financial penalties, non-compliance creates operational problems. Your ability to invest in India becomes severely restricted. You may miss claiming DTAA benefits that reduce your tax burden because proper FATCA/CRS declarations are required to claim treaty relief.
Increased scrutiny from tax authorities follows non-compliance. Both IRS and Indian Income Tax Department use FATCA/CRS data to identify potential tax evaders. Getting flagged can trigger audits and detailed investigations into all your financial affairs.
Professional consequences can occur for certain visa holders and green card applicants. Tax compliance issues can affect visa renewals and green card status. The reputational damage and stress of dealing with penalties and frozen accounts far exceeds the minimal effort required for compliance.
What Are the Common Mistakes NRIs Make?
Understanding frequent errors helps you avoid them. These mistakes often result from confusion about requirements rather than intentional non-compliance.
Mistake 1: Not Updating KYC When Status Changes
Many NRIs complete FATCA/CRS declarations when opening accounts but forget to update them when their circumstances change. Moving from the US to India changes your tax residency status, requiring immediate KYC updates. Your FATCA declaration should reflect that you're no longer a US resident, though US citizens remain subject to FATCA regardless of residence.
Acquiring or losing green card status is another trigger. Getting a green card makes you a US person for FATCA purposes. Surrendering or losing green card status (officially, not just by living abroad) changes your reporting obligations.
Changes in citizenship require updates within 30 days. If you acquire Indian citizenship and renounce US citizenship, you must inform all financial institutions. The process isn't automatic. Each institution maintains separate records requiring individual updates.
Address changes, especially moving to a different country, affect your tax residency under CRS. Your financial institution must report you to the correct country's tax authority based on your current tax residence.
Mistake 2: Confusing FBAR with Form 8938
Many NRIs file Form 8938 and believe they've fulfilled all reporting requirements, not realizing FBAR is separate. The forms go to different agencies (IRS vs FinCEN) and have different thresholds and covered assets.
Some NRIs file FBAR but skip Form 8938 because they think the information is duplicative. While there's overlap, both filings are legally required if you meet the respective thresholds. The penalties for missing either can be assessed separately.
The $10,000 FBAR threshold is aggregate value at any time, not year-end value. Many NRIs calculate only year-end balances and miss the FBAR requirement because their accounts were higher mid-year. Your NRO account might have 8 lakh rupees at year-end, but if it held 12 lakh rupees in July when you received rental income, you exceeded the threshold.
Mistake 3: Providing Incorrect Tax Residency Information
Tax residency isn't the same as citizenship or visa status. A common error is assuming you're only tax-resident in the country where you physically live. Tax residency rules vary by country and you can be tax-resident in multiple countries simultaneously.
US citizens and green card holders must always declare US tax residency on FATCA forms, even if they're also tax-resident elsewhere. An NRI who's been back in India for three years but still holds a green card must continue declaring US tax residency.
Using wrong TIN or providing incomplete TIN causes problems. Your TIN in the US is your Social Security Number, not your passport number or green card number. Providing incorrect TIN can trigger verification requests and delay your account activation.
Some NRIs check "No" to having US tax residency because they don't currently live in America, not realizing their citizenship or green card makes them US persons. Financial institutions use "indicia" like US birthplace or US address to identify potential US persons. Falsely denying US connection when these indicators exist constitutes providing inaccurate information.
Mistake 4: Missing the DTAA Connection
NRIs often don't realize that FATCA/CRS declarations affect their ability to claim Double Taxation Avoidance Agreement benefits. To claim reduced TDS rates under DTAA, you must have proper FATCA/CRS declarations on file with Indian financial institutions.
Without valid FATCA/CRS declarations, your tax residency status can't be verified. This means you get taxed at standard rates (often 20-30% for NRIs) instead of the lower treaty rates. The difference can be substantial on interest income, dividends, and capital gains.
Some NRIs believe DTAA automatically applies without any action needed. You must file Form 67 with the Income Tax Department, but before that, your FATCA/CRS declarations must confirm your tax residency in a country that has a tax treaty with India. Keeping your declarations current is the first step in understanding how to claim DTAA benefits.
How Can NRIs Stay Compliant?
Maintaining compliance doesn't need to be overwhelming. A systematic approach keeps you on track with minimal ongoing effort.
Annual Compliance Checklist
Create a compliance calendar to track important dates. Mark April 15 as your FBAR deadline with automatic extension to October 15. Your tax filing deadline (and Form 8938 deadline) is typically April 15, with extension possible until October 15 if you file Form 4868.
Review all your foreign financial accounts in December each year. Calculate maximum values during the year for FBAR purposes and year-end values for Form 8938. Convert all foreign currency amounts to US dollars using IRS exchange rates published on their website.
Gather year-end statements from all Indian banks and investment accounts. Mutual fund statements should show your holdings as of December 31. Bank statements should clearly show maximum balance during the year. For capital gains, collect contract notes and sale proceeds documentation.
Check your FATCA/CRS declarations with each Indian institution annually. Log into your bank and mutual fund portals to verify that your tax residency information is current and accurate. If you've moved countries or changed status, update immediately.
Maintain organized records for at least six years. Keep copies of filed Forms 8938, FBAR submissions, FATCA/CRS declarations, and all supporting documents. Digital copies backed up to cloud storage ensure you don't lose critical compliance records.
When to Update Your Information
Immediate updates are required for specific triggers. Within 30 days of moving to a different country, update your FATCA/CRS declarations with all financial institutions. Acquiring or surrendering citizenship in any country requires prompt notification.
Green card status changes need immediate action. Obtaining a green card means you become a US person for tax purposes from that date. Formally abandoning your green card (by filing Form I-407 and receiving acknowledgment) ends your US person status, but you must update all institutions.
Marriage or divorce can affect your filing status and thresholds. Getting married might mean you now file jointly with higher thresholds. Divorce changes you back to single filer status with lower thresholds.
Opening new accounts in India triggers FATCA/CRS declarations. Each new bank account, mutual fund investment, or insurance policy requires a fresh declaration. Don't assume information from one institution automatically transfers to another.
Employment changes affecting your income level should be updated. While not legally required mid-year, updating your income range ensures more accurate reporting when institutions file annual statements to tax authorities.
Working with Tax Professionals
Given the complexity of cross-border tax compliance, many NRIs benefit from professional help. A tax professional familiar with both US and Indian tax laws can navigate the overlap between FATCA, FBAR, and NRI tax filing requirements.
Choose professionals with specific NRI experience. A CPA or Enrolled Agent in the US should understand FATCA and FBAR requirements. An Indian Chartered Accountant should understand CBDT reporting requirements and how they interact with US obligations.
The cost of professional help is typically much less than potential penalties. Basic FBAR and Form 8938 preparation costs $200-500 per year. Compare this to minimum penalties of $10,000 for missed Form 8938 or $16,536 for missed FBAR.
Tax professionals can also help with comprehensive financial planning for NRIs, ensuring your investment structure minimizes compliance burden while maximizing tax efficiency. They can identify whether your accounts actually need reporting or fall under exemptions.
Using Technology for Compliance Tracking
Several tools and apps help NRIs track compliance obligations. Calendar apps with recurring reminders ensure you don't miss deadlines. Set reminders for January 31 to gather documents, March 15 for organizing, and early April for filing.
Spreadsheet templates can track all your foreign accounts in one place. Include columns for institution name, account number, account type, maximum value during year, year-end value, and currency. Update monthly and convert to USD in December using IRS rates.
Password managers help secure access to multiple financial institution portals. With accounts across countries, keeping login credentials organized and secure is important for annual statement collection.
The IRS Free File program offers free tax preparation software if your income is below certain thresholds. Many programs support Form 8938 filing. FBAR must be filed separately through the BSA E-Filing System, which is free for all filers.
Conclusion
FATCA and CRS compliance isn't optional for NRIs investing in India. Complete your FATCA/CRS self-declarations accurately when opening any Indian financial account. File Form 8938 with your US tax return if your foreign assets exceed thresholds, and separately file FBAR through FinCEN if your foreign accounts exceed $10,000. Review your compliance status annually and update information immediately when your circumstances change. The consequences of non-compliance range from frozen accounts to penalties exceeding $50,000. Taking these steps now protects your financial access and avoids unnecessary penalties. Start by reviewing your current Indian investments and checking whether your FATCA/CRS declarations are complete and accurate.
Frequently Asked Questions
Do I need to file both FBAR and Form 8938 as an NRI?
You may need to file both if you meet the respective thresholds, as they serve different purposes. FBAR is required if your foreign financial accounts exceed $10,000 in aggregate at any time during the year. Form 8938 is required if your specified foreign financial assets exceed $50,000 (US residents) or $200,000 (living abroad) at year-end. These are separate requirements with different agencies (FinCEN vs IRS), and penalties can be assessed for missing either one.
Many NRIs with significant investments in India find themselves needing to file both because the low FBAR threshold of $10,000 is easy to exceed. Learn more about FBAR requirements for NRIs here.
What happens if my Indian bank account gets frozen due to incomplete FATCA?
Your account will remain frozen until you submit complete and accurate FATCA/CRS declarations to the financial institution. You won't be able to make withdrawals, transfers, or new investments during this period. To resolve it, contact the institution immediately, request the required declaration form, complete it with accurate information including your tax residency and TIN, and submit with supporting documents like PAN, passport, and overseas address proof.
Most institutions process complete submissions within 7-15 working days and restore account access. The longer the account remains non-compliant, the more reporting issues arise, so address frozen accounts immediately.
Can I be penalized in both the US and India for non-compliance?
Yes, you can face penalties in both countries because each has its own compliance requirements. In the US, you risk $10,000 to $50,000 in penalties for not filing Form 8938, plus separate penalties up to $165,353 for missing FBAR. In India, you can be penalized 5,000 rupees per account per year for providing inaccurate FATCA/CRS information, and your accounts may be frozen. Financial institutions in India also face penalties which they can recover from you.
The penalties are not coordinated between countries, meaning both can assess separate penalties for the same underlying non-compliance. Proper compliance in both jurisdictions protects you from this dual exposure.
Do OCI cardholders need to file FATCA declarations?
OCI (Overseas Citizen of India) cardholders must file FATCA declarations if they're US persons for tax purposes. Having an OCI card doesn't change your US tax obligations. If you're a US citizen or green card holder with OCI status, you must declare US tax residency on FATCA forms when investing in India.
However, if you're not a US person (for example, a Canadian citizen with OCI), you don't need FATCA declaration but will need CRS declaration for your Canadian tax residency. Tax on remittances to India and other obligations depend on your tax residency, not your OCI status.
How do I know if I qualify as a US person for FATCA purposes?
You qualify as a US person if you meet any of these criteria: you're a US citizen by birth or naturalization, regardless of where you live. You hold a US green card (lawful permanent resident), even if you spend most time outside the US. You meet the substantial presence test by being physically present in the US for at least 31 days during the current year and 183 days over a three-year period including the current year.
US domestic corporations, partnerships, and trusts also qualify. Even if you were born in the US but now hold Indian citizenship, you remain a US person unless you formally renounced US citizenship following the proper legal process. When in doubt, answer yes on FATCA forms, as penalties for incorrect denial are severe.
What's the deadline for filing Form 8938 and FBAR?
Form 8938 is due on the same date as your federal income tax return, typically April 15. If you file for an extension using Form 4868, your deadline extends to October 15. Form 8938 is attached to your tax return, so both are filed together. FBAR has an April 15 deadline, but there's an automatic extension to October 15 without needing to request it. Unlike Form 8938, FBAR is filed separately through the FinCEN BSA E-Filing System, not with your tax return.
For NRIs living abroad, you may qualify for additional automatic extensions for your tax return (and thus Form 8938), but FBAR extensions still end at October 15. Missing either deadline can trigger substantial penalties, so mark both dates clearly on your calendar.
About the Author
By Prakash
CEO & Founder of InvestMates
Prakash is the CEO & Founder of InvestMates, a digital wealth management platform built for the global Indian community. With leadership experience at Microsoft, HCL, and Accenture across multiple countries, he witnessed firsthand challenges of managing cross-border wealth. Drawing from his expertise in engineering, product management, and business leadership, Prakash founded InvestMates to democratize financial planning and make professional wealth management accessible, affordable, and transparent for every global Indian.
