Part 2 · Reporting Indian income and assets on the US return
Indian income on a US return: the map, and the rupee-to-dollar question
A US tax resident reports worldwide income. A table of where each common Indian item goes, what India exempts that the US does not, and which exchange rate to use.
7 min read · Rules checked October 30, 2026
If you are a US citizen, green card holder or resident under the substantial presence test (how to tell), your Indian income is part of your US taxable income. Being an NRI, and so taxed in India only on Indian-source income, makes no difference to the US side.
Five rules that cover most of it
- Worldwide income is reported, whether or not it was sent to the US and whether or not India taxed it.
- Indian exemptions do not travel. NRE interest, agricultural income, the Section 54 reinvestment exemption, PPF interest and Section 80C deductions have no US equivalent. Something tax-free in India is often taxable in the US.
- Everything is reported in dollars, using the rules below.
- Indian tax is not a deduction but may be a credit (foreign tax credit), and only up to a limit.
- Assets are reported too, apart from the income they produce (FBAR and Form 8938).
Where common items go
| Indian item | US treatment | Where reported |
|---|---|---|
| NRE, NRO, FCNR and savings interest | Taxable interest | Schedule B, Form 1040 |
| Dividends from Indian companies | Dividends; may be qualified | Schedule B, Form 1040 |
| Rent from Indian property | Rental income less expenses and depreciation | Schedule E |
| Sale of property or shares | Capital gain in USD | Form 8949, Schedule D |
| Indian mutual funds, ETFs, ULIPs | Usually PFIC | Form 8621 |
| Agricultural income | Taxable | Depends on type |
| EPF, PPF, NPS, pension | Depends; see article | Varies |
| Salary for work done in India | Wages; credit for Indian tax | Form 1040, Form 1116 |
| Interest in an Indian company or partnership | Foreign entity reporting | Forms 5471, 8865 |
| Indian bank and demat accounts | Reportable assets | FinCEN 114, Form 8938 |
Salary for days you physically work in India is taxable in India. The treaty (Article 16) exempts it only if all three conditions hold: you are in India 183 days or fewer in the year, your employer is not resident in India, and the pay is not borne by an Indian permanent establishment. Check the way the days are counted.
Converting rupees to dollars
There is no single official rate, so choose a reasonable published source and apply it consistently.
- Income earned through the year (interest, rent, salary, dividends): the IRS's yearly average exchange rate, or a rate on the date received.
- Purchases and sales (property, shares): the spot rate on each transaction date. The cost is converted at the purchase date rate, the proceeds at the sale date rate. The difference includes the rupee's movement, so a gain in rupees can become a smaller gain, or even a loss, in dollars.
- Taxes paid in India: the rate on the date paid, or the average rate if you use the accrual election for the foreign tax credit.
- Account balances for FBAR and Form 8938: the year-end rate published by the US Treasury (Bureau of the Fiscal Service).
Where to get the figures
Indian banks issue interest certificates and Form 16A (TDS on non-salary income). The Indian income tax portal shows your Form 26AS and Annual Information Statement (AIS) with TDS and reported transactions, which is the quickest way to check nothing is missed. You will need a PAN. Statements from brokers, rent receipts and property deeds do the rest.
Most common omissions
- Interest on NRE and savings accounts that were "tax free"
- Indian rent when a relative collects it
- Mutual funds bought in India and redeemed years later
- Joint accounts with parents, and accounts inherited
- Insurance maturity proceeds that exceed the premiums paid
Indian law in more detail
- NRI taxability flowchart: status to schedule (BharatTax)
- The 182-day rule and residential status (BharatTax)
General information, not tax advice. Thresholds, rates and forms are updated every year and your facts may differ. Confirm with a US CPA (and, for Indian filings, an Indian Chartered Accountant) before acting.