FATCA & FBAR: What NRIs in the USA Must Report on Indian Bank Accounts

Why This Comes Up So Often for Our Clients

We're an India-law firm, so we don't file US tax forms — but a huge share of the matters we handle end with money or an asset landing in a US person's name: a demat transmission completes, an NRO account is finally accessed, a property sale's proceeds get repatriated. At that exact moment, a US reporting question usually opens up, and clients understandably want to know, in plain terms, what just got triggered before they call their accountant. This article is that plain-terms map — not a substitute for your CPA's advice, but enough context to have a focused, efficient conversation with them instead of an open-ended one.

FBAR: Reporting Foreign Financial Accounts to the Treasury

The Report of Foreign Bank and Financial Accounts — FinCEN Form 114, universally called FBAR — must be filed by any "US person" (a US citizen, green card holder, or US tax resident) who had a financial interest in, or signature authority over, one or more foreign financial accounts whose combined value exceeded $10,000 at any point during the calendar year. That threshold is an aggregate across all your foreign accounts, checked at their highest combined point during the year, not a per-account figure and not a year-end balance — so an NRO account that briefly held ₹9 lakh after a property sale, even if it was moved out within the week, can still trigger the filing.

What counts as a "financial account" is broad: savings and current accounts, fixed deposits, NRE and NRO accounts, and demat or brokerage accounts held with an Indian financial institution all generally qualify. FBAR is filed electronically with FinCEN, separately from your income tax return, and the filing itself doesn't create any tax — it's purely a disclosure of the account's existence and maximum value. The real risk sits in not filing when required: civil penalties can apply even for a non-willful miss, and they escalate meaningfully if the IRS concludes the omission was willful.

FATCA: Form 8938 and the Broader Reporting Net

The Foreign Account Tax Compliance Act created a second, related filing — Form 8938, "Statement of Specified Foreign Financial Assets" — which is filed with your annual income tax return rather than separately with FinCEN. Its thresholds are higher than FBAR's and depend on both your filing status and whether you live in the USA or abroad: broadly, unmarried US residents file above $50,000 at year-end or $75,000 at any point in the year; married couples filing jointly file above $100,000/$150,000; and those figures roughly double for taxpayers who live outside the USA. Form 8938 also reaches somewhat further than FBAR — beyond accounts, it can capture foreign stock or securities held directly, not through an account, and certain interests in foreign entities.

The practical result is that many NRIs end up filing both forms for the same underlying accounts, because FBAR's threshold is lower and its definition of "account" narrower, while Form 8938's threshold is higher but its definition of "asset" broader. Neither form replaces the other, and missing one because you correctly filed the other is a genuinely common, avoidable mistake — this is precisely the kind of overlap a CPA experienced in offshore reporting sorts out quickly, but only if they have complete, accurate information about what actually exists on the India side.

What Generally Does Not Need to Be Reported

Two points cause a disproportionate amount of unnecessary worry. First, real estate you own directly in India — an apartment, ancestral land, a house — is not itself a reportable foreign financial account or asset under either FBAR or Form 8938, because it isn't a financial account or security. The property only becomes relevant to these filings indirectly, if rental income from it sits in an Indian bank account that independently crosses the reporting threshold, or if the property is held through a foreign entity or trust rather than in your own name. Second, simply inheriting an asset is not itself a taxable event under US law — receiving money or property from a deceased parent's estate does not, by itself, create US income tax. What it can create is the separate Form 3520 disclosure discussed below, which is informational, not a tax bill.

Form 3520: The Filing Inheritance Specifically Can Trigger

Beyond FBAR and Form 8938, a US person who receives a gift or inheritance from a nonresident alien individual or a foreign estate — which describes most inheritances from a parent or relative who was living in India — generally must file Form 3520 if the total received from that person (or related persons) exceeds $100,000 in a calendar year. This is purely an informational filing; there's no US tax on the inheritance itself, but the penalties for filing late or not at all can be significant relative to the effort required to file correctly and on time. Because this threshold is measured per calendar year and per donor, timing matters — if you're expecting an inheritance to arrive in stages (a share transmission completing months after a bank account is closed, for example), it's worth mapping the expected timeline with your CPA in advance rather than discovering the filing requirement after the year has already closed.

Where This Connects to the India-Side Work We Actually Do

We don't prepare or file FBAR, Form 8938, or Form 3520 — that work belongs with your US CPA or tax attorney. What we do is the India-side legal work that generates the numbers and dates those filings depend on: completing a demat or physical share transmission after a parent's death, obtaining a succession certificate so an inherited account can actually be accessed, or coordinating a property sale and its FEMA-compliant repatriation. When we hand off a completed matter, we can provide your US preparer with clear documentation — transmission dates, account values at transfer, sale proceeds and repatriation dates — so their filings are built on accurate information rather than your best recollection of a process that happened on the other side of the world.

Frequently Asked Questions

Related Reading & Services

• NRI Taxation & Income Tax — our full service guide to India-side tax notices, TDS, and filing obligations.
• NRI Banking & Repatriation of Funds — for moving Indian sale proceeds or inherited funds to the USA under FEMA.
• My Father's Demat Account Shows Shares I Can't Access From the USA — for the transmission process that often precedes an FBAR question.
• NRI Will Drafting & Probate — coordinating your India-specific will or succession matter with your broader estate plan.
• More NRI Legal Guides — browse all articles on property, banking, inheritance, and taxation for NRIs in the USA.