US Expats in India: EPF, PPF, NRE/NRO & FTC vs FEIE (2026)

India attracts hundreds of thousands of US citizens — Indian-Americans returning to build businesses or care for aging parents, tech professionals on rotational assignments in Bangalore or Hyderabad, executives managing South Asia operations from Mumbai or Delhi, and retirees drawn by family ties and lower cost of living. India also presents the most layered compliance exposure of any major expat destination: EPF contributions with contested US tax treatment, a PPF savings scheme that most advisors treat as a foreign grantor trust, a comprehensive investment market where every pooled product is a PFIC, no functioning US-India totalization agreement for self-employed citizens, and NRE/NRO bank accounts that require FBAR tracking from day one. The income tax picture is genuinely nuanced — India's effective rates can reach 39% for high earners, making FTC the right choice for most professionals, while the new tax regime's effective zero-band on lower incomes creates a scenario FEIE candidates should model. None of this is intuitive, and the compliance stakes — a missed Form 3520, EPF employer contributions not recognized as US income, an inadvertent PFIC in Indian mutual funds — are substantial.

1. India Income Tax at a Glance (FY 2025-26 / AY 2026-27)

India taxes resident individuals under one of two regimes. The new tax regime is now the default and offers lower rates with minimal deductions. The old regime allows Section 80C, HRA, and other deductions but starts at higher rates for most income levels. Most employed US citizens in India will default to the new regime.¹

New Regime — Income Tax Slabs, FY 2025-26 (AY 2026-27):

Surcharges (applied on top of income tax, before cess):

• Income ₹50L–₹1Cr: 10% surcharge
• ₹1Cr–₹2Cr: 15% surcharge
• ₹2Cr–₹5Cr: 25% surcharge
• Above ₹5Cr: 25% surcharge (new regime; 37% under old regime)

Health & education cess: 4% on (tax + surcharge) — applied universally.¹

The maximum effective marginal rate under the new regime for very high earners above ₹5 crore (~$5.9M) is: 30% × 1.25 (surcharge) × 1.04 (cess) = 39%. For income in the ₹1Cr–₹2Cr range (~$1.18M–$2.35M), the marginal rate is 30% × 1.15 × 1.04 = 35.9%. For the ₹50L–₹1Cr band (~$590K–$1.18M): 30% × 1.10 × 1.04 = 34.3%.

Section 87A rebate — the effective zero-tax band: Resident individuals (not NRIs) with taxable income up to ₹12 lakh (~$141K) receive a full rebate of up to ₹60,000, making their net Indian income tax zero. Salaried employees also receive a ₹75,000 standard deduction, so salaried income up to approximately ₹12.75L (~$150K) bears no Indian income tax under the new regime.¹ This is meaningful for FEIE vs FTC analysis (Section 2 below).

Note: The Section 87A rebate applies to resident individuals only — those present in India 182+ days in the tax year. US citizens living in India full-time are typically Indian residents for tax purposes and qualify. NRI status (fewer than 182 days in India) eliminates the rebate.

2. FEIE vs Foreign Tax Credit: Why FTC Wins for Most India Expats

For most US citizens earning professional-level salaries in India, the Foreign Tax Credit (FTC) is the better strategy — and by a wide margin at higher incomes.

How FTC works for India: You pay Indian income tax (which includes surcharge and cess) and claim that amount as a credit against your US federal income tax liability on the same income. At effective Indian rates of 30–39% for higher earners, the FTC typically exceeds US federal income tax on the same income — leaving no residual US federal tax and generating an FTC carryforward (usable for 10 years).

Illustrative example — US engineer earning ₹80 lakh (~$94K USD) in Bangalore:

• India income tax (new regime, no rebate since income >₹12L): approximately ₹21.5 lakh (~$25,300), effective rate ~26.9%
• US federal tax on $94K (single, standard deduction ~$15K, taxable income ~$79K): approximately $12,600
• FTC available: ~$25,300 > US tax of $12,600 → FTC eliminates all US federal income tax
• Excess FTC carryforward: ~$12,700 (usable for 10 years on future high-FTC returns)

Why FEIE is rarely better for India:

• FEIE limit: Only $132,900 of foreign earned income is excludable in 2026.² Any income above this threshold is fully exposed to US tax — but FTC already covers it at Indian rates.
• IRA / Roth IRA elimination: Under IRC §219(f)(1), IRA contributions require earned income not excluded by FEIE. If you FEIE-exclude all your India salary, you lose IRA and Roth IRA access for that year.
• Five-year revocation lock-in: Once elected, revoking FEIE bars re-election for five years — relevant if you later move to a lower-tax country.
• SE tax trap: Under IRC §1402(a)(8), FEIE provides no relief from self-employment tax. Self-employed US citizens in India owe full SE tax (15.3%) on net SE income regardless of FEIE election.

When FEIE might deserve consideration: If you are a US citizen working in India with income below approximately ₹12.75L (~$150K) and you qualify as an Indian resident, the Section 87A rebate means you owe essentially zero Indian income tax. In this scenario, FTC offers little benefit (no Indian tax to credit), and FEIE might eliminate the modest US tax on the same income. This applies mainly to corporate secondees during a transition year, retirees drawing small India income, or individuals working part-year. For the typical US professional in India on a full-year corporate assignment — earning $100K+ — FTC is the dominant strategy. Use our FEIE vs FTC calculator to model your specific situation.

3. EPF (Employee Provident Fund): The §402(b) Trap

EPF is India's mandatory retirement savings program, administered by the Employees' Provident Fund Organisation (EPFO). For US citizens employed by Indian companies or Indian subsidiaries of multinational employers, EPF creates a US tax complication that most advisors miss.

How EPF works:

• Both employee and employer contribute 12% of basic salary + dearness allowance (DA) each month³
• The employer's 12% is split: 3.67% goes to the EPF account, 8.33% goes to the Employees' Pension Scheme (EPS)
• EPS contributions are capped based on a ₹15,000/month wage ceiling
• EPF earns a government-declared interest rate — 8.25% for FY 2025-26³
• EPF is tax-advantaged in India: employee contributions are deductible under Section 80C (old regime, up to ₹1.5L), interest is tax-free, and qualifying withdrawals after 5 years are tax-free

US tax treatment of EPF — the §402(b) problem:

• Employer contributions are US-taxable compensation. Under IRC §402(b), employer contributions to a nonqualified foreign retirement plan are included in the employee's gross income in the year they vest. The employer's 12% EPF contribution (and EPS contribution) is vested from the point of contribution for most purposes — meaning it is additional taxable compensation on your US return in the same year, even though you cannot access it until separation or retirement.
• Employee contributions provide no US deduction. Your own 12% EPF contributions are made from after-US-tax income. India may allow a Section 80C deduction under the old regime, but that has no effect on your US return.
• EPF interest is US-taxable annually. The 8.25% EPF interest is tax-free in India but taxable in the US each year as ordinary income. No foreign tax credit is available because India does not tax EPF interest.
• Form 3520 / 3520-A risk: The EPF trust structure may constitute a foreign grantor trust for US purposes. Conservative cross-border practitioners file annual Forms 3520 and 3520-A to disclose the EPF account. The IRS has not issued definitive guidance on EPF, but failure to file if required carries penalties of 35% of the gross reportable amount.

Practical impact on a US employee earning ₹50L/year basic salary: At 12% employer EPF contribution, the employer contributes approximately ₹6L/year to EPF and EPS — which is approximately $7,000/year of additional US-taxable compensation that may appear nowhere on your Indian payslip. Over a 5-year assignment, this represents $35,000+ of unreported US income if not correctly structured.

Some multinational employers run India assignments through a US entity and structure compensation so EPF is waived or grossed up — but many do not. Verify the EPF arrangement with both your HR department and a cross-border advisor before your first year-end.

4. PPF (Public Provident Fund): The Foreign Trust Trap

The PPF is India's most popular long-term savings scheme — government-backed, 15-year lock-in, tax-free in every dimension under Indian law. For US citizens, it is a compliance trap.

How PPF works in India:

• Annual contributions up to ₹1.5 lakh (~$1,765) to a PPF account held at a designated bank or post office
• Government-declared interest rate (currently 7.1% p.a., set quarterly)⁴
• 15-year maturity (with extension options in 5-year blocks)
• Triple tax-exempt in India: contributions deductible under Section 80C (old regime), interest tax-free, maturity proceeds tax-free

US treatment of PPF:

• No US deduction on contributions. Section 80C provides no relief on your US return — PPF contributions are made from after-US-tax income.
• Interest taxable in the US annually. Regardless of the Indian exemption, 7.1% PPF interest accruing in your account is US gross income each year under the US constructive receipt rules for trust income (if it is a grantor trust) or the cash-method rules. No foreign tax credit is available (India does not tax PPF interest).
• Foreign grantor trust treatment. The IRS has not issued specific guidance on PPF. Most conservative US cross-border practitioners treat the PPF as a foreign grantor trust, triggering annual Form 3520 (transactions with foreign trusts) and Form 3520-A (annual information return of a foreign trust) filing obligations. Penalty for failure to file: 35% of the gross reportable amount, or $10,000 minimum, per year.
• FBAR and Form 8938 reporting. The PPF account balance must be reported on FBAR and counts toward Form 8938 thresholds.

The net result: a US citizen earns 7.1% interest in a PPF account, pays Indian tax of zero on it, pays US ordinary income tax on it at up to 37%, and incurs annual Form 3520/3520-A filing costs. There is no US benefit to holding PPF. The recommendation from most cross-border specialists: don't open a PPF account unless you have a specific reason and have modeled the compliance cost.

5. NPS (National Pension System): PFIC and §402(b) Exposure

NPS is India's market-linked national pension scheme, available to both government and private-sector employees. Many multinational employers with Indian operations provide corporate NPS contributions as part of their compensation packages.

US treatment of NPS:

• Employer contributions are §402(b) income. Like EPF, employer NPS contributions vest when made and are US-taxable compensation in the contribution year.
• NPS funds are PFICs. NPS invests in pension funds offered by approved Pension Fund Managers (HDFC Pension, ICICI Pru Pension, SBI Pension, Kotak Pension, etc.). These are pooled investment vehicles domiciled in India — they satisfy the PFIC definition under IRC §1297 because substantially all their assets are passive (equities, bonds, government securities). Each NPS fund holding requires a Form 8621 election to avoid the punitive §1291 excess-distribution regime.
• No treaty deferral. The US-India treaty (1989) does not provide pension deferral treatment for NPS contributions comparable to the US-UK treaty's Article 18(1) SIPP deferral.
• NPS Tier II: The Tier II account (flexible withdrawal) is an even worse trap — it's a freely accessible PFIC account with no Indian tax benefits for non-government employees and full US PFIC exposure.

The PFIC problem with NPS overlaps with the broader India investment landscape (Section 7 below). The key practical point: if your employer makes NPS contributions, those are reportable US income and the account requires Form 8621 reporting.

6. NRE vs NRO Bank Accounts: FBAR and the Interest Tax Asymmetry

US citizens living in India or holding Indian financial accounts typically maintain either NRE (Non-Resident External) or NRO (Non-Resident Ordinary) accounts — or both. The US tax treatment differs significantly between the two.

NRE Accounts (Non-Resident External):

• Hold foreign currency converted to INR; principal and interest are freely repatriable
• Interest is tax-exempt in India — entirely
• For US citizens: NRE interest is fully taxable in the US each year as ordinary income. No FTC is available because India charges zero tax.
• NRE account balances must be reported on FBAR (FinCEN 114) if aggregate foreign account balances exceed $10,000
• NRE accounts also count toward Form 8938 FATCA thresholds

NRO Accounts (Non-Resident Ordinary):

• Hold India-source rupee income (rental income, Indian dividends, Indian pension payments, etc.)
• India withholds 30% TDS on NRO interest payments to NRIs⁵
• This 30% TDS creates a foreign tax credit opportunity — you can credit the Indian withholding against your US tax liability on the same NRO interest income
• Repatriation from NRO: up to USD $1 million per year (post-tax, with CA certificate)
• FBAR, Form 8938 reporting applies to NRO balances as well

Practical note on high NRE balances: US citizens who receive dollar-denominated compensation from a US employer and hold it in an NRE account earn interest at Indian rates (currently 6–7% per annum on NRE fixed deposits) with zero Indian tax. The catch: every rupee of that interest is US-taxable with no FTC offset. If you're holding ₹2 crore ($235K) in an NRE FD earning 6.5%, you have ~$15,000 of US-taxable income annually with no foreign tax credit to offset it.

7. Indian Mutual Funds, SIP, ELSS, and ETFs: All PFICs

India's mutual fund market is one of the largest in Asia, with over 44 AMCs managing thousands of schemes. For US citizens, every Indian-domiciled mutual fund is a Passive Foreign Investment Company (PFIC) under IRC §1297 — including index funds, tax-saving ELSS funds, balanced funds, and debt funds.

This includes:

• Nifty 50 and Sensex index funds (Zerodha, Mirae, SBI, HDFC, UTI, Nippon)
• ELSS (Equity-Linked Savings Scheme) funds — also possibly a foreign trust due to the 3-year lock-in
• Balanced and hybrid funds
• Debt funds and liquid funds
• Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs) — PFIC analysis required
• Systematic Investment Plans (SIPs) — the monthly contribution structure doesn't change the underlying PFIC classification

Without a QEF or mark-to-market election, gains from Indian mutual funds face the §1291 excess-distribution regime — taxed at the 37% ordinary income rate plus a compounding interest penalty from the year you first held the position. Our PFIC tax impact calculator shows how this penalty erodes returns over multi-year holding periods compared to a US-domiciled equivalent.

What's not a PFIC: Direct equity ownership in individual NSE/BSE-listed Indian companies (Infosys, TCS, HDFC Bank, Reliance shares held directly) is not PFIC — PFIC classification applies to pooled investment vehicles, not operating companies. If you hold individual Indian stocks in a DEMAT account, those are subject to regular US capital gains rules, not the PFIC regime.

The solution is the same as in every country: hold US-domiciled ETFs (VTI, VXUS, BND) in accounts accessible from India. Interactive Brokers and Charles Schwab International maintain accounts for US citizens resident in India. Before departing the US, transfer Indian mutual fund positions to US ETF equivalents and close SIPs that are in PFIC funds.

8. No US-India Totalization Agreement: Self-Employment Tax Trap

The United States has totalization agreements with 30 countries that prevent dual social insurance taxation.⁶ India is not among them. This has real consequences for self-employed US citizens in India and those working for Indian companies without a US entity payroll.

For self-employed US citizens in India: Net self-employment income — whether from consulting, freelancing, a sole proprietorship, or a personal service corporation — is subject to full US self-employment tax regardless of FEIE election:

• 12.4% Social Security tax on net SE income up to the 2026 SS wage base ($176,100)⁷
• 2.9% Medicare tax on all net SE income (no ceiling)
• 0.9% Additional Medicare Tax on SE income exceeding $200,000 (single)
• Total SE tax on income up to the SS base: 15.3%

This SE tax is assessed separately from income tax under IRC §1401 and is not relieved by FEIE. A US citizen in India earning $150,000 of consulting income owes full SE tax (~$22,950 on income up to the SS wage base), plus India income tax at ~30–35% marginal rate, plus US income tax net of FTC (likely zero with sufficient FTC). Without a totalization agreement, there is no Certificate of Coverage to exempt India-based earnings from FICA.

For US citizens employed by Indian companies: The Indian employer does not withhold US FICA. If you are not also on a US entity's payroll, your US Social Security and Medicare obligations may fall entirely to the self-employed rate. Structure your arrangement carefully with a cross-border advisor before signing an Indian employment contract.

A note on the existing situation: Some practitioners cite a bilateral social security understanding between India and the US signed around 2009. As of 2026, the SSA does not list India on its official totalization agreement country list, and no formal agreement is in force that prevents dual Social Security contributions for India-based US workers. Treat India as a non-totalization country unless this changes.

9. The US-India Tax Treaty: What the Saving Clause Means for US Citizens

The US and India have a comprehensive income tax treaty (Convention for the Avoidance of Double Taxation, entered into force 1990).⁸ Like most US treaties, it contains a saving clause in Article 1(4) that preserves the US's right to tax its own citizens as if the treaty did not exist. This means most treaty benefits are unavailable to US citizens living in India.

What the saving clause eliminates for US citizens:

• Treaty-based pension deferral: there is no US-India provision analogous to the US-UK Article 18(1) SIPP deferral or the US-Canada Rev. Proc. 2014-55 RRSP deferral — EPF, PPF, and NPS cannot be treaty-deferred for US purposes
• Treaty-based resident tiebreaker: Article 4's tiebreaker (for dual-residency situations) cannot be used by US citizens to avoid US tax on Indian income
• Reduced withholding on most income types that might otherwise be treaty-reduced

What the treaty does provide (saving-clause exceptions):

• Article 20 (Pensions): Some protection for pension income — if an Indian pension source qualifies, there may be treaty treatment. But EPF/PPF/NPS do not clearly fit within Article 20's scope for deferral purposes.
• Article 10 (Dividends): For dividends from Indian-resident companies paid to a US resident, the treaty caps India's withholding rate at 15% for portfolio dividends (10% for substantial holdings). This creates a creditable FTC of up to 15% on Indian dividend income.
• Article 11 (Interest): Caps India's withholding rate on interest at 10–15% in various circumstances. NRO interest TDS (currently 30% under domestic law) may be reduced under the treaty to the applicable Article 11 rate for treaty-eligible US residents — this requires filing Form 13 (lower withholding certificate) with Indian tax authorities.
• Mutual Agreement Procedure (MAP): Article 28 provides a mechanism to resolve double-taxation disputes with the Indian tax authorities — useful if the same income is being taxed by both countries without coordination.

For operational purposes: most US citizens in India rely on the FTC mechanism rather than treaty provisions for relief from double taxation. The treaty's main practical value is the Article 10/11 withholding caps on investment income, which reduce TDS rates on DEMAT dividends and NRO interest for treaty-claiming US recipients.

10. Indian Real Estate: Capital Gains, Currency Risk, and §121

Many US citizens in India own or acquire Indian real estate — a family home, a flat purchased during an India assignment, or inherited property. The US and India both claim taxing rights on capital gains.

India's capital gains on real estate (FY 2025-26): Per the Finance Act 2024 (effective July 23, 2024), long-term capital gains (property held >24 months) are taxed at 12.5% without indexation. For property acquired before July 23, 2024, individuals can choose between 12.5% without indexation and 20% with Cost Inflation Index (CII) indexation — whichever is more beneficial.⁹ Short-term capital gains (held ≤24 months) are added to income and taxed at ordinary rates.

US tax treatment of Indian real estate gains:

• The US taxes capital gains on worldwide real estate. Long-term gains (held >1 year in the US) face rates of 0/15/20% plus 3.8% NIIT above $200K modified AGI (single).
• The Indian capital gains tax paid (12.5% on the rupee gain) is a creditable foreign tax under IRC §901, generating FTC to offset US capital gains tax on the same transaction.
• §121 exclusion: A US citizen who uses Indian property as a principal residence may be eligible to exclude up to $250,000 ($500,000 MFJ) of gain from US federal income tax — if they meet the 2-of-5-year residency test. The exclusion applies to the US taxable gain (computed in dollars), not the Indian rupee gain.
• Currency gain trap: The US computes gain using dollar-denominated cost basis and sales proceeds. If the INR has depreciated against the USD between your purchase and sale dates, your USD-equivalent gain will be smaller than the INR gain. If the INR has appreciated, the opposite — you could have a large USD gain even with a modest rupee gain. This currency translation creates tax asymmetries that need careful planning on large transactions.

India's TDS on NRI property sales: When a non-resident sells Indian property, the buyer must withhold TDS at 20–22.88% of the gross sale consideration (not the gain). The NRI must then file an Indian return to claim a refund for the tax paid in excess of actual liability. Budget a 6–12 month cycle for this refund process.

11. FBAR, FATCA, and India's Model 1 IGA

India signed a FATCA Intergovernmental Agreement (Model 1 IGA) with the United States in 2015.¹⁰ Under this agreement, Indian financial institutions report US account holders to the Indian Central Board of Direct Taxes (CBDT), which shares the information with the IRS. This means the IRS receives automatic annual data on your Indian bank accounts, DEMAT accounts, insurance policies with cash value, and other financial accounts from Indian institutions — whether you report them or not.

FBAR (FinCEN 114) — report if aggregate foreign account balance >$10,000 at any point:

• NRE and NRO bank accounts at any Indian bank
• DEMAT accounts (held at CDSL/NSDL through a depository participant)
• PPF accounts (if treated as a financial account, which most practitioners require)
• NPS Tier I and Tier II accounts
• EPF account (if you have the right to withdraw — often disputed; conservative practice is to report)
• Indian brokerage accounts, fixed deposits, recurring deposits

Form 8938 (FATCA) — threshold for US citizens abroad: $300,000 (single) / $600,000 (MFJ) at any point during the year, or $200,000 / $400,000 at year-end. Many US expats in India with multiple accounts (NRE FDs, DEMAT, EPF, PPF, NPS) exceed the FBAR $10,000 threshold easily. Form 8938 thresholds are typically reached by anyone with significant India savings.

Common India-specific FBAR mistake: Forgetting to report joint accounts (e.g., a joint NRO account with an Indian family member where the US citizen has signature authority but believes it's "not theirs"). Signature authority over an account with >$10,000 triggers an FBAR obligation regardless of ownership.

12. State Tax Residency: The Pre-Departure Domicile Trap

Moving to India does not automatically end your US state income tax obligation. California, New York, Virginia, and other aggressive states can continue to tax your worldwide income if you remain domiciled there. California does not recognize the FEIE and has its own sourcing rules that can capture India-source income. See our state tax residency guide for the full domicile-severance checklist — this is a required step before any long-term India relocation.

13. What to Do Before Moving to India

1. Model FTC vs FEIE for your specific compensation package. Get the projected India salary in INR, the EPF employer contribution amount, any NPS contributions, and run the numbers. For most corporate salaries, FTC dominates — but verify.
2. Negotiate EPF treatment with your employer before signing. Some multinational employers have India payroll structures that waive EPF for senior employees or non-residents; others gross up compensation to cover the US tax on the §402(b) income. Know which structure applies before your first Indian payslip.
3. Reposition your US investment portfolio before departing. If you hold Indian mutual funds (including in an existing NRI account), convert them to US-domiciled ETF equivalents now. Once you become a US citizen in India, purchasing additional Indian mutual fund units creates ongoing PFIC obligations.
4. Do not open a PPF account. Unless a specialist has modeled the compliance cost (Form 3520/3520-A annually, no US tax benefit on the interest) and concluded the benefit exceeds the cost, PPF is not worth the complexity for US citizens.
5. Set up FBAR and Form 8938 tracking from Day 1. Track every Indian account from the day it opens. The $10,000 FBAR threshold can be reached within days of funding an NRE fixed deposit. Use a spreadsheet or a cross-border tax tool to track account high-water marks throughout the year.
6. Sever your US state domicile before departing. Update your driver's license, voter registration, and professional registrations. California and New York are particularly aggressive about claiming ongoing residency — read our state residency guide and execute the severance steps before your move date.
7. Consider Roth conversions in the departure year. The year you leave a US job may be a low-income year relative to prior years. A Roth conversion in that calendar year — before India income begins — can be executed at a lower marginal rate than in a full India-employment year.
8. Evaluate your self-employment structure carefully. If you are moving to India to run a business or consult independently, the lack of a US-India totalization agreement means full US SE tax applies on all net SE income. Structure your India business entity (if any) with cross-border tax advice to minimize unnecessary double-taxation.
9. Plan the NRE vs NRO account strategy. If you will receive India-source income (rent, Indian dividends, Indian salary), an NRO account is required. If you want to hold dollar-earned savings in India at Indian interest rates, an NRE account works — but remember NRE interest is fully US-taxable with no FTC offset.

What an India-Specialist Expat Advisor Handles

A US generalist RIA will often decline to serve non-US-resident clients or lack the India-specific knowledge to handle EPF, PPF, and NPS correctly. An Indian CA will optimize your India return but has no awareness of §402(b), Form 3520, or PFIC rules. A US-licensed, fee-only advisor who works actively with US citizens in India handles both sides:

• FTC vs FEIE decision modeling specific to your compensation, filing status, and Indian tax residency
• EPF §402(b) employer contribution analysis and coordination with HR/payroll
• PPF Form 3520/3520-A compliance and cost-benefit evaluation
• NPS PFIC classification, Form 8621 elections, and employer contribution US tax treatment
• Indian mutual fund PFIC divestiture planning — transition to US ETF equivalents without triggering unnecessary US gains
• NRE/NRO account structuring and FBAR/Form 8938 annual reporting
• Real estate capital gains planning: §121 exclusion eligibility, currency gain modeling, India TDS refund process
• Indian dividend and interest withholding: FTC crediting and treaty Article 10/11 rate reductions
• Self-employment tax planning and business entity structure for India-based consultants
• US state domicile severance documentation for California, New York, and other aggressive states
• Non-US spouse planning: QDOT trust for Indian spouse, FBAR signature authority, $194,000 annual gift exclusion for non-citizen spouses in 2026¹¹
• Exit tax planning under IRC §877A if considering expatriation

1. Income Tax Department of India / ClearTax: Income Tax Slabs FY 2025-26 (AY 2026-27) — New Tax Regime. Slabs: 0/5/10/15/20/25/30%; surcharge caps of 10/15/25% under new regime; 4% health & education cess; Section 87A rebate up to ₹60,000 for resident individuals with income ≤₹12L; ₹75,000 standard deduction for salaried. cleartax.in — income tax slabs FY 2025-26
2. IRS Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad — Foreign Earned Income Exclusion. 2026 FEIE limit $132,900 per IRS Rev. Proc. 2025-67. irs.gov/publications/p54
3. ClearTax / EPFO: EPF Contribution Rates 2025-26. Both employee and employer contribute 12% of basic salary + DA; employer split 3.67% EPF + 8.33% EPS; EPS capped at ₹15,000/month wage; EPF interest rate 8.25% for FY 2025-26. cleartax.in — EPF contribution rates and interest rate
4. Ministry of Finance, Government of India: PPF interest rate. Currently 7.1% per annum, set quarterly. PPF interest is tax-exempt under Section 10(11) of the Income Tax Act for Indian taxpayers. Interest is ordinary income for US federal tax purposes and is not creditable as a foreign tax (no Indian tax is imposed on it). NSI India — PPF scheme details
5. Income Tax Act §195 / §194A (TDS on interest paid to NRIs): Indian domestic law requires 30% TDS on NRO account interest paid to non-residents. US treaty (Article 11) may allow reduction to applicable rate on treaty claim. CBDT regulations on NRO TDS rates. incometaxindia.gov.in — withholding tax rates
6. SSA: International Programs — U.S. International Social Security Agreements. The SSA maintains totalization agreements with 30 countries; India does not appear on the official SSA list. No Certificate of Coverage mechanism is available for India-based workers. ssa.gov/international/agreements_overview.html
7. IRS Rev. Proc. 2025-67: Social Security wage base for 2026 is $176,100. Self-employment tax: 12.4% SS + 2.9% Medicare = 15.3% on net SE income up to the SS base; 2.9% Medicare on all net SE income above the base. IRC §1401. irs.gov — topic 554 self-employment tax
8. IRS: United States-India Income Tax Treaty (1989, in force 1990). Convention for the Avoidance of Double Taxation; saving clause at Article 1(4). Treaty text and technical explanation available on IRS treaty page. irs.gov — India tax treaty documents
9. Finance Act 2024 / ClearTax: Long-term capital gains tax changes effective July 23, 2024. LTCG on listed equity shares and equity mutual funds: 12.5% (no indexation), with ₹1.25L annual exemption; LTCG on property: 12.5% without indexation, or 20% with CII indexation for property acquired before July 23, 2024 (individual/HUF option). Budget 2025 and Budget 2026 made no further changes to LTCG rates. cleartax.in — LTCG tax FY 2025-26
10. CBDT / IRS: India-US FATCA Intergovernmental Agreement (Model 1 IGA), signed July 9, 2015; in force. Indian FFIs report US account holders to CBDT; CBDT exchanges information with IRS under the IGA. irs.gov — FATCA IGA list
11. IRC §2523(i): Annual exclusion for gifts to non-citizen spouses. 2026 limit $194,000 per IRS Rev. Proc. 2025-67. Non-citizen spouses do not qualify for the unlimited marital deduction under IRC §2056(d). See also non-US spouse planning guide.

US tax values verified as of May 2026 against IRS.gov and SSA.gov. India tax values for FY 2025-26 (AY 2026-27) verified against Income Tax Department (incometax.gov.in) and ClearTax. INR/USD exchange rate references are illustrative (₹85:$1); actual values depend on rates at time of transaction. PPF, EPF, and NPS US tax treatment reflects dominant practitioner approach in the absence of specific IRS guidance — consult a qualified cross-border advisor for your situation.