What do I file in India now that I live in the US?
An Indian return is driven by what arises there and by your status under Indian rules, so the answer comes from an inventory rather than from a principle. Rent from a flat, interest credited on deposits, a share of profits from a business, gains on a sale: each of these can require a filing even in a year you never set foot in the country. Tax deducted at source on those amounts does not replace the return; it is provisional, and the return is what settles the liability. That settled figure is also what your US credit is measured against.
Do I have to tell the US about my Indian bank accounts?
Accounts held abroad are reported separately from the income they earn, and that is the distinction to hold on to. Interest goes into the income computation on your US return; the existence of the accounts, and what is in them, is a disclosure obligation of its own that applies even where the interest is trivial. Joint accounts opened with parents, deposits rolled over automatically and accounts left behind at a former employer's bank all count and are all routinely forgotten. Building the list once, with the bank's own statements behind it, is most of the work.
Does my Indian retirement account go on my US return?
Start with what the arrangement is rather than what it is called. The US applies its own characterisation to a foreign savings or retirement arrangement, and that characterisation, not the Indian description of it, decides how it is taxed and what has to be disclosed. The consequence is that an arrangement treated as long-term savings in India will not necessarily be left alone in the US until you draw on it. The document establishing the account and its terms is what settles this, so it is worth obtaining before a position is taken and then recorded so it holds for future years.
Do I file in both countries for the same year?
You file in both, but not for the same year, and that is the trap. India runs April to March and the US reports on a calendar year, so a single Indian year maps onto two US years and no Indian document translates directly onto a US return. Income has to be apportioned to the periods it was earned in and the tax has to be split on the same basis, or the credit ends up in a different year from the income it relates to. Keeping monthly records rather than annual summaries is what makes this straightforward.
My flat in India is rented — what goes where?
The rent is taxed in India because the property is there, and it goes on your US return as well because a US person reports income wherever it arises, with credit for the Indian tax properly payable. Both computations have to be done on their own rules: what is allowed against the rent differs between the systems, so the taxable rent is rarely the same number in each. The property and any local account through which the rent is collected are disclosures in their own right, separate from the income, and the Indian return should be settled first so the credit rests on a real figure.
I never filed US returns while working in India — can I fix it?
Yes, and the fix is to do it deliberately and completely rather than to start filing from this year and hope the earlier ones are forgotten. These files usually have two gaps, not one: the returns themselves and the separate disclosure of accounts held in India. Both have to be brought forward together. The work is to establish the years involved, reconstruct income and Indian tax paid for each from payslips, certificates and bank records, and prepare a coherent set of filings with the reconciliation attached, so the position you present is complete on its face.
How is foreign tax credit claimed in India?
By furnishing Form 67 with proof of the foreign tax — the certificate or statement from the other country's authority or payer — and by relieving the income under the specific DTAA article rather than generally. The credit is limited to the Indian tax on that income, and it is computed source by source rather than in one pool. The deadline for furnishing Form 67 has been amended more than once, so we confirm it for the year rather than assume. See foreign tax credit in India.
What is the Liberalised Remittance Scheme?
The Reserve Bank of India framework under which a resident individual may remit up to an annual ceiling for permitted purposes — education, medical treatment, travel, maintenance of relatives, investment in shares or property abroad — with gifts and loans to non-residents inside the same ceiling. You declare the purpose to the bank on Form A2. The ceiling and the excluded purposes are set by the RBI and have changed more than once, so the figure to work from is the one current at the date of the transfer. See Form A2 and LRS remittances.
