Build · Chapter 25
Taxes Across the Corridor
Orientation, not advice. The year you move, you’re a tax resident of somewhere in both countries — this page maps who taxes what, which forms exist, and when you need professionals on each side.
The one-sentence version
The year you move, India taxes you on Indian income, the US starts taxing you on worldwide income once you become a US tax resident, and the DTAA plus foreign tax credits stop you from paying twice on the same rupee — if you file correctly on both sides.
Jargon: The DTAA (Double Taxation Avoidance Agreement) is the 1989 India–US treaty that assigns taxing rights and lets each country credit tax paid to the other.
When the US starts counting you
Two ways to become a US tax resident: 1. Green card test — you hold one. (Not you, yet.) 2. Substantial Presence Test (SPT) — a day-count: you’re a resident if you spend ≥31 days in the US this year AND (days this year) + ⅓(days last year) + ⅙(days year before) ≥ 183.
Practical translation: land on an O-1 in, say, August and stay, and you’ll typically cross into residency during your first or second calendar year. First-year movers often file a dual-status return (part-year non-resident, part-year resident) — this is exactly the return you should not DIY.
Once resident, the US taxes your worldwide income: Indian rent, Indian mutual fund gains, Indian interest — all reportable in the US.
Your Indian status: NRI, and the RNOR trapdoor (for later)
India counts days too: spend less than 182 days in India in a financial year (with some conditions) and you’re an NRI (Non-Resident Indian) — India then taxes only your India-sourced income, not your US salary.
Jargon: RNOR (Resident but Not Ordinarily Resident) is India’s transition status — you count as an Indian resident by day-count, but your foreign income stays untaxed in India.
RNOR matters at two moments: - The year you leave: if you depart late in India’s April–March financial year, you may still be an Indian resident that year. Timing your move before ~September 28 (keeping India days under 182) usually lands you NRI status for the departure year — worth planning with your CA. - If you ever move back: returning NRIs typically get RNOR status for up to ~3 financial years, during which foreign income (US capital gains, RSU sales) stays out of India’s net — the single biggest tax-planning window in the corridor. File it away.
FBAR and FATCA: report your Indian accounts or regret it
Once you’re a US tax resident, your Indian financial life must be disclosed:
| Report | Trigger (verify current thresholds) | Filed with |
| FBAR (FinCEN Form 114) | All foreign accounts combined exceeded $10,000 at any point in the year | FinCEN, online, separate from tax return |
| FATCA (Form 8938) | Foreign financial assets above ~$50,000 (single, US-resident; higher for joint filers) | Attached to your US tax return |
That includes NRE/NRO accounts, Indian mutual funds, and often PPF/EPF. Penalties for non-filing start at ~$10,000 per violation, and Indian banks report your accounts directly to the IRS under the 2015 India–US FATCA agreement — this is not a “they’ll never know” situation. Also: Indian mutual funds are generally PFICs (a punitive US tax category for foreign pooled funds) — many corridor CPAs advise selling them before you become a US resident. Needs professional verification for your holdings.
The two-calendar problem
| US | India | |
| Tax year | Calendar year (Jan–Dec) | Financial year (Apr–Mar) |
| Personal filing deadline | April 15 (Oct 15 with extension) | July 31 (for non-audit individuals) |
| Who you need | CPA with India-corridor experience | CA who handles NRI filings |
The mismatched years mean the same income can fall in different reporting periods on each side — one reason you want your CA and CPA to talk to each other (or use one cross-border firm). Your Delaware C-corp adds its own calendar: corporate return (Form 1120) April 15, Delaware franchise tax March 1, and Form 5472 reporting for the foreign-owned side.
When you actually need both professionals
- Year of the move: yes, both. Dual-status US return + final Indian resident/NRI return + FBAR/FATCA setup. Budget $1,500–4,000 for the US side, ₹15–50k for the Indian side (varies widely; verify quotes).
- Steady state (US resident, no Indian income): CPA yes; CA only if you still have Indian rent, capital gains, or the flipped Indian subsidiary.
- If you flipped (article 5): the entities need their own accountants — transfer pricing between the Indian subsidiary and US parent is a standing compliance item on both sides.
Do this now
- ☐ Note your India day-count for the current Indian FY — it decides NRI status for the departure year
- ☐ List every Indian account, folio, and policy with peak balances — this is your future FBAR worksheet
- ☐ Ask a corridor CPA about your Indian mutual funds (PFIC) before you trigger US residency — this is the expensive one to miss
- ☐ Convert your Indian savings accounts to NRO/NRE once you’re an NRI — required by FEMA anyway
- ☐ Hire one cross-border firm or a CA+CPA pair for year one — DIY the steady state later if you like, never the transition year
Nobody tells you
- The SPT is a formula, not a vibe: a well-timed first landing (e.g., after July 2) can push your first full US-resident year out by a year, changing what Indian income the US ever sees. Ten minutes with a CPA before booking your one-way flight can be worth lakhs.
- FBAR is filed with FinCEN, not the IRS, and isn’t part of your tax return — a shocking number of otherwise compliant filers miss it because their tax software never asked.
- Interest on your NRE account is tax-free in India but fully taxable in the US once you’re a US resident — the “tax-free NRI FD” pitch from Indian banks quietly stops being true the day you pass the SPT.
Sources & further reading
- India Briefing: India’s DTAAs — treaty basics and how relief works.
- Crescent: Avoid Double Taxation USA–India (2026) — corridor-specific mechanics incl. SPT.
- ClearTax: NRI Status and Taxation — India’s residency day-count rules.
- ReturningNRIs: RNOR Status Explained (2026) — the RNOR window and eligibility (9-of-10 years NRI / ≤729 days tests).
- Belong: FATCA rules for US NRIs with Indian investments (2026) — Form 8938 thresholds and Indian-asset specifics.
- NDS: US tax implications and reporting for Indian accounts — FBAR $10k trigger, Indian-account reporting.
- CountryTaxCalc: India to USA Tax Guide 2026 — filing-calendar and first-year overview.
This is general information, not legal/tax advice — verify with a professional before acting.