Nine easy mix-ups with Indian funds abroad, and the fix
Nine mix-ups that are easy to make when you hold Indian mutual funds abroad, each with a plain fix and the page to read next. They cover thresholds, rates, accounts, fund-house limits and Indian forms.
Prepared by Prem Tax and Accounting Corp. Last checked against official sources on November 5, 2026.
Most slips with Indian funds are small ones: the wrong measure, the wrong year or the wrong rate. Our Kitchen-Table Mistake Sweep catches them before a form goes in. We prepare U.S. returns and work alongside your adviser in India, Canada or Europe. See the reporting table and our Indian CPA page.
- A balance, a year-end value and a cost are three different numbers, and each form asks for one.
- Years, rates and form numbers differ by country, and Indian form numbers changed on April 1, 2026.
- Whether an Indian scheme is a PFIC is common practice and not settled: no IRS ruling names Indian funds.
The mix-ups
| Mix-up | Fix | Read |
|---|---|---|
| Treating the USD 25,000 Form 8621 exception as per fund | Add all PFIC units at year end (USD 50,000 joint). A sale gain or excess payout needs a form whatever the value | PFIC guide |
| Leaving folios and NRE or NRO accounts out of the FBAR total | Add the highest balance of every account. Folios are generally counted toward USD 10,000, though the rules do not name Indian folios | FBAR guide |
| Using one value for every form | Keep the highest value in the year, the December 31 value and the cost | Reporting table |
| Using the wrong exchange rate | FinCEN's instructions point to Treasury's rate for December 31 for the FBAR; Canada uses Bank of Canada rates | Exchange rates |
| Assuming every fund house takes every holder | Some stop purchases and SIPs for U.S. or Canadian residents but keep redemption open; no Indian law bars ownership | Fund-house limits |
| Believing NRE interest is tax-free at home too | It is exempt in India while you are non-resident; the U.S. taxes worldwide interest | NRI accounts |
| Skipping the Indian return because TDS was taken | A non-resident whose total income passes the basic exemption generally files; excess TDS comes back only through a return | India tax guide |
| Assuming a UK holding is a reporting fund | Unless the exact class was on HMRC's list throughout, a gain is generally taxed as income, with no GBP 3,000 exemption | UK guide |
| Using old Indian form numbers | Since April 1, 2026: Form 41 (was 10F), 128 (13), 145 and 146 (15CA and 15CB) and 166 (61B) | KYC and FATCA guide |
Our checklist
The Kitchen-Table Mistake Sweep:
- Which measure does each form ask for: balance, value or cost?
- Which year and which rate belong to each country?
- Did I count every account type, folios and NRE or NRO accounts included?
- Which official page gave each figure, and what is its date?
Common questions
Is every Indian fund a PFIC?
Treating Indian schemes as PFICs is common practice, not settled law. The [PFIC guide](/indian-mutual-funds/countries/usa-pfic-and-form-8621/) shows what we know and what is open.
How are old mistakes fixed?
Talk to a qualified adviser in the country concerned first. Late routes include the IRS procedures for late information returns, Canada's Voluntary Disclosures Program and the UK's Worldwide Disclosure Facility.
Do these figures change?
Yes. Thresholds, penalty tables and lists move each year; see [sources and updates](/indian-mutual-funds/tools/sources-and-updates/).
Official sources
- IRS: Instructions for Form 8621 (Rev. December 2025)
- IRS: Comparison of Form 8938 and FBAR requirements
- FinCEN: Reporting the maximum account value
- CRA: Form T1135, Foreign Income Verification Statement
- GOV.UK: Approved offshore reporting funds
- Income Tax Department, India: Income tax returns FAQ
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