FBAR and FATCA for NRI Bank and Demat Accounts in India
US persons with Indian NRE/NRO accounts and demat accounts must report them. FBAR threshold: $10,000. FATCA: $50,000. Here are the exact rules and filing deadlines.
US persons (citizens, green card holders, substantial presence test passers) must report Indian NRE/NRO bank and demat accounts on FBAR (FinCEN Form 114) if the aggregate balance exceeds $10,000 at any point during the year. FATCA Form 8938 applies with higher thresholds ($50,000 year-end or $75,000 at any point for single US residents).
- FBAR: Aggregate foreign accounts >$10,000 any day of year -- FinCEN 114, due April 15 (auto-extended to Oct 15)
- FATCA Form 8938: >$50,000 year-end OR >$75,000 anytime (unmarried, US-based) -- attached to your 1040
- Both FBAR and FATCA may apply simultaneously -- different purposes, different thresholds
- NRE accounts, NRO accounts, and demat accounts all count as financial accounts for FBAR
US persons with Indian NRE accounts, NRO accounts, or demat accounts must report them to the US government under two separate regimes: FBAR (FinCEN Form 114) and FATCA (Form 8938). These are different forms, filed in different ways, with different thresholds and different consequences for non-compliance. Both may apply to the same accounts simultaneously.
FBAR -- FinCEN Form 114
FBAR (Foreign Bank Account Report) requires US persons to report foreign financial accounts if the aggregate maximum value of all foreign accounts exceeded $10,000 at any point during the calendar year.
| FBAR detail | Specifics |
|---|---|
| Threshold | Aggregate value of all foreign accounts exceeds $10,000 at any single day during the year |
| Who must file | US citizens, green card holders, residents (including H-1B holders who pass Substantial Presence Test) |
| Form | FinCEN Form 114 (NOT attached to your tax return) |
| Filed via | BSA E-Filing System at FinCEN's website |
| Due date | April 15 -- automatic extension to October 15 (no separate extension request needed) |
| What to report | Account number, bank name and address, maximum value during the year |
FATCA -- Form 8938
FATCA (Foreign Account Tax Compliance Act) requires US persons to report specified foreign financial assets on Form 8938, attached to their annual Form 1040. The thresholds are higher than FBAR.
| Filing status and location | Year-end threshold | Threshold at any time during year |
|---|---|---|
| Unmarried, living in the USA | More than $50,000 | More than $75,000 |
| Married filing jointly, living in the USA | More than $100,000 | More than $150,000 |
| Unmarried, living outside the USA | More than $200,000 | More than $300,000 |
| Married filing jointly, living outside the USA | More than $400,000 | More than $600,000 |
FBAR vs FATCA -- Key Differences
| Feature | FBAR (FinCEN 114) | FATCA (Form 8938) |
|---|---|---|
| Threshold (single, US-based) | $10,000 aggregate | $50,000 year-end / $75,000 anytime |
| Filed with | FinCEN separately (not tax return) | Attached to Form 1040 |
| Due date | April 15 (auto-extends to Oct 15) | April 15 (same as Form 1040) |
| Penalty for non-filing (non-willful) | Up to $10,000 per violation | $10,000, rising to $50,000 after notice |
| Penalty for willful failure | Up to $100,000 or 50% of account balance | Civil and potentially criminal penalties |
| Accounts covered | Financial accounts (bank, demat, brokerage) | Financial accounts + some foreign entity interests |
FBAR and FATCA serve different legal purposes (anti-money laundering vs tax compliance), which is why both exist and both may apply. Filing one does not satisfy the other.
Which Indian Accounts Must Be Reported?
| Account type | FBAR required? | Form 8938 required? |
|---|---|---|
| NRE savings account | Yes, if threshold crossed | Yes, if threshold crossed |
| NRO savings account | Yes, if threshold crossed | Yes, if threshold crossed |
| NRI demat account | Yes (market value of securities counts) | Yes, if threshold crossed |
| Fixed deposits (FDs) in India | Yes, if threshold crossed | Yes, if threshold crossed |
| NRE fixed deposits | Yes | Yes, if threshold crossed |
| Indian PPF (Public Provident Fund) | Consult tax adviser -- contested | Likely yes |
| Indian mutual funds (direct) | Yes, if threshold crossed | Yes -- also triggers PFIC rules |
Penalties and Why Compliance Matters
FBAR penalties are among the most severe in US tax law:
- Non-willful FBAR violation: Up to $10,000 per violation per year (each account, each year is a separate violation)
- Willful FBAR violation: Up to the greater of $100,000 or 50% of the account balance per violation per year
- Criminal penalties: Possible for willful violations -- up to 5 years imprisonment
- FATCA non-filing: $10,000 penalty, increasing by $10,000 for each 30-day period (up to $50,000) after IRS notice
If You Are Behind on Filings
The IRS offers the Streamlined Filing Compliance Procedures for US persons who failed to report foreign accounts non-willfully. There are two tracks:
- Streamlined Domestic Offshore Procedures: For US residents -- 5% miscellaneous offshore penalty on highest aggregate unreported balance
- Streamlined Foreign Offshore Procedures: For US persons living abroad -- no miscellaneous penalty
This section is informational only. Consult a qualified US tax professional with international experience before using any IRS compliance program.
Frequently Asked Questions
Do I need to file FBAR for my NRE account in India?
Yes, if the aggregate balance of all your foreign financial accounts (including the NRE account) exceeded $10,000 at any point during the calendar year. This applies regardless of whether you earned any income from the account. FBAR is filed separately from your tax return on FinCEN Form 114 via the BSA E-Filing System.
What is the FBAR threshold for Indian bank accounts?
The FBAR threshold is $10,000 aggregate across all foreign financial accounts at any single point during the year -- not the year-end balance. If your NRE account had $12,000 in April but dropped to $4,000 by December 31, you still owe FBAR because the $10,000 threshold was crossed.
Is a demat account a financial account for FBAR purposes?
Yes. A demat (dematerialized securities) account held at an Indian broker or depository participant is a foreign financial account for FBAR purposes. Its value (market value of securities held) counts toward the $10,000 aggregate threshold. NRI demat accounts must be included in FBAR reporting.
Does FATCA apply to NRO accounts?
Yes. NRO accounts are foreign financial accounts and are subject to both FBAR and FATCA reporting for US persons. The FATCA threshold (Form 8938) is higher: more than $50,000 at year-end or more than $75,000 at any time during the year (for unmarried US residents). FBAR and FATCA serve different purposes and both may apply.
What happens if I did not file FBAR for my NRE account?
If the failure was non-willful, the IRS Streamlined Filing Compliance Procedures allow you to catch up with reduced penalties. If the failure was willful, penalties are severe. Consult a qualified US tax professional immediately -- do not attempt to self-correct a multi-year FBAR failure without professional guidance.
stoicHQ is not a SEBI-registered investment adviser, SEC-registered adviser, or FINRA member. FBAR and FATCA rules are complex and penalties are severe. Consult a qualified US international tax professional for your specific situation. This content is informational only.
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