If you've been non-compliant (not filing FBAR, not reporting Form 8621), the IRS has amnesty programs:
PPF and H1B Visa: Is Your Public Provident Fund a PFIC?
Good news: PPF is NOT classified as a PFIC. It's a government-sponsored scheme with different US tax treatment. But contributions have limits for US residents.
Why This Matters for H1B Holders
The US tax system treats Indian financial products very differently from how India treats them. The gap between what Indians expect and what the IRS requires is enormous — and costly.
Most H1B holders discover these rules only when:
- Filing taxes for the first time with a CPA who specializes in international returns
- Receiving an IRS notice or audit
- Reading Reddit threads from other H1B holders who made expensive mistakes
The information below is designed to help you get ahead of these issues.
The Core Framework
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| Indian Product | US Classification | Annual Filing | Tax Treatment |
|---|---|---|---|
| Equity Mutual Funds | PFIC | Form 8621 | Ordinary income (37%) |
| Debt Mutual Funds | PFIC | Form 8621 | Ordinary income (37%) |
| India ETFs | PFIC | Form 8621 | Ordinary income (37%) |
| NRE FD | Foreign Account | FBAR | Ordinary income |
| NRO FD | Foreign Account | FBAR | Ordinary income (+ TDS credit) |
| PPF | Govt Scheme | FBAR | Complex |
| NPS | Pension | Possibly PFIC | Complex |
| SGBs | Govt Securities | Unclear | Debated |
| Stocks (direct) | Foreign Securities | FBAR if >$10K | Capital gains |
Compliance Priority
- File FBAR — if any foreign account exceeded $10,000, file FinCEN 114 by June 15
- File Form 8621 — for each PFIC held (each mutual fund is a separate PFIC)
- File Form 8938 — if total foreign assets exceed $50,000 (FATCA reporting)
- Claim Form 1116 — foreign tax credit for taxes paid to India on the same income
Getting Into Compliance
If you've been non-compliant (not filing FBAR, not reporting Form 8621), the IRS has amnesty programs:
- Streamlined Foreign Offshore Procedures — 5% penalty on highest balance
- Delinquent FBAR Submission Procedures — for first-time non-filers
- Voluntary Disclosure Program — for willful non-compliance
See a qualified CPA before choosing a program. The right choice depends on your specific situation.
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