NRIs holding Indian property and bank accounts are increasingly subject to automatic information exchange under FATCA (USA) and CRS (most other countries). Indian banks share account balances, interest income, and transaction details with foreign tax authorities annually — and the NRI is independently required to declare these in their country of tax residence. Failure to do so attracts severe penalties — FBAR violations alone can be $10,000-$100,000 per year per account in the USA. This guide explains what gets reported, what NRIs need to file, and how to ensure consistency.
What is FATCA and how does it apply to NRIs in the USA?
FATCA (Foreign Account Tax Compliance Act, USA, 2010) requires US persons (citizens, green card holders, US tax residents) to report all foreign financial accounts above certain thresholds, AND requires foreign financial institutions to report US-person accounts to the IRS.
Indian banks have signed FATCA Inter-Governmental Agreement (IGA) with India — they collect FATCA self-certification at account opening and report annually to Indian Income Tax Department, which forwards to IRS.
For NRIs in USA holding Indian NRO/NRE/FCNR accounts, the bank reports: account holder details, US TIN/SSN, account number, year-end balance, interest credited, and large transactions. The NRI must independently file FBAR (FinCEN Form 114) if aggregate Indian account balances exceeded $10,000 at any point in the year, AND Form 8938 (Statement of Specified Foreign Financial Assets) with their US tax return if balances exceed thresholds.
What is CRS and how does it apply to NRIs in non-US countries?
CRS (Common Reporting Standard, OECD, 2014) is the multilateral version of FATCA — over 110 countries automatically exchange account information annually. India joined CRS in 2016.
For NRIs in UK, Canada, Australia, Singapore, Germany, UAE, and other CRS countries, Indian banks:
(1) Collect CRS self-certification at account opening (tax residency, TIN).
(2) Report annually to Indian tax authorities.
(3) Indian authorities forward to the country of tax residence.
Country-specific reporting forms NRIs must file: UK — declaration on Self Assessment SA106 if Indian rental income or interest; Canada — Form T1135 (Foreign Income Verification Statement) if total foreign property exceeds CAD 100,000; Australia — declare worldwide income on tax return, ATO uses CRS data to verify; Singapore — generally no separate form (Singapore taxes only Singapore-source for individuals); Germany — declare worldwide income on Steuererklärung, Anlage AUS for foreign income.
What information about Indian property is reported under FATCA/CRS?
Direct property ownership is NOT reported under FATCA/CRS — only FINANCIAL accounts are reported.
However:
(1) Bank accounts holding rental income (NRO) ARE reported with year-end balance and interest.
(2) Sale proceeds credited to NRO ARE reflected in the year-end balance and reported.
(3) Rental income credited to the account is implicit in account activity.
(4) Most countries' tax residents must independently declare property income and capital gains in their tax return regardless of CRS reporting.
(5) Some jurisdictions (Canada T1135, Australia worldwide income disclosure) require declaration of the underlying foreign property itself if value exceeds threshold.
In practice, foreign tax authorities can detect undisclosed Indian rental income easily — bank statements, large remittances, and CRS data create a complete picture.
What is FBAR and what are the penalties for non-filing?
FBAR (Foreign Bank Account Report, FinCEN Form 114) is filed by US persons with the US Treasury, separately from the income tax return:
(1) Required if at any point during the year, aggregate value of all foreign accounts exceeded $10,000 (this is the threshold per US person, not per account).
(2) Filing deadline — 15 April with automatic extension to 15 October.
(3) Filed online at FinCEN BSA E-Filing system.
(4) Disclose: account number, bank name, address, year-end balance, maximum balance during year, joint owners.
Penalties for non-filing:
(1) Non-willful — up to $10,000 per violation per year (recent Supreme Court ruling Bittner v. United States 2023 capped at per-form basis).
(2) Willful — up to $100,000 OR 50% of account value, whichever is greater.
(3) Criminal penalties possible for egregious cases. NRIs should file FBAR every year — not optional, not waivable.
What is Form 8938 and how does it differ from FBAR?
Form 8938 (Statement of Specified Foreign Financial Assets) is filed with the US tax return (Form 1040), unlike FBAR which goes to FinCEN. Threshold for unmarried US person living abroad: aggregate foreign financial assets exceeding $200,000 at year end OR $300,000 at any point.
For married filing jointly living abroad: $400,000 / $600,000.
Lower thresholds for US-resident filers. Form 8938 captures more information than FBAR — it includes financial accounts AND certain foreign financial assets (some forms of foreign property held through entities). Many NRIs in USA must file BOTH FBAR and Form 8938 — they are independent filing requirements with overlapping but distinct information.
Penalty for non-filing Form 8938: $10,000 initial, additional $50,000 for continued non-filing.
What is Canadian Form T1135 and how does it apply to NRIs from Canada?
Form T1135 (Foreign Income Verification Statement) is filed by Canadian tax residents with the CRA if specified foreign property exceeds CAD 100,000 in cost at any time during the year.
For Canadian NRIs holding Indian property and bank accounts:
(1) Indian bank accounts (NRO/NRE/FCNR) — reported with cost (deposits made, in CAD equivalent).
(2) Indian shares and securities — reported.
(3) Indian rental property — DIRECTLY reported (Canada includes foreign real estate held for income generation, not personal use property) at cost basis.
(4) Indian property held purely for personal use (not rented) is NOT reported on T1135. The form has detailed reporting (each country, each asset category) for amounts above CAD 250,000.
Penalty for non-filing — CAD 25 per day, minimum CAD 100, maximum CAD 2,500; gross negligence penalty 5% of fair market value.
What if an NRI has not been reporting Indian accounts in the country of residence?
Many NRIs in early years of foreign residence don't realise they must report Indian accounts. Most countries have voluntary disclosure programs:
(1) USA — Streamlined Filing Compliance Procedures (for non-willful failures): file delinquent FBARs and amended tax returns for last 6 years, certify non-willful conduct, pay any tax due plus reduced penalty (0% to 5%). For wilful failures — Voluntary Disclosure Program (VDP) which involves higher penalties but criminal protection.
(2) Canada — Voluntary Disclosures Program (VDP) of CRA: file overdue T1135 and amended returns, pay tax + interest, penalties typically waived.
(3) UK — HMRC Worldwide Disclosure Facility (WDF): online disclosure of offshore income, penalties from 0-200% depending on facts.
(4) Australia — informal disclosure to ATO before they discover.
(5) Germany — Selbstanzeige (self-disclosure) is recognised but must precede any tax authority action. Always engage a local tax practitioner for voluntary disclosure — DIY can backfire.
How can NRIs ensure their Indian and foreign tax filings are consistent?
Best practices to avoid red flags:
(1) Use the same name spelling, date of birth, and address on Indian PAN, NRO/NRE bank accounts, and foreign tax filings. (2) Maintain a single annual reconciliation showing: Indian rental gross, TDS, net, Indian capital gains, foreign tax credit claimed in country of residence.
(3) Keep all Form 16A, Form 26AS, Indian ITR copies, and FIRC records — needed for foreign tax credit substantiation.
(4) Convert Indian rupee amounts to foreign currency at consistent exchange rates (year-end rate or average rate, applied consistently).
(5) For CRS purposes, ensure Indian banks have your correct foreign tax residence and TIN — incorrect data leads to mis-routed reporting.
(6) When transitioning from NRI to resident (or vice versa), notify both tax authorities and re-designate accounts.
(7) Engage a cross-border tax practitioner annually for review — costs Rs 25,000-50,000 but saves multiples in penalty exposure.
For complete details on selling property in India as an NRI and understanding the complete legal, tax, and repatriation process, visit our Selling Property in India page.