India

The Employees' Provident Fund runs under the Code on Social Security, 2020, in force from 21 November 2025,¹ and the Employees' Provident Funds Scheme, 2026, which replaced the 1952 scheme on its publication in the Gazette dated 29 June 2026.² The employer pays 12% of wages, or 10% in establishments the government notifies, and the employee pays an equal amount, deducted from wages.^3,4 Both are worked out on wages up to a ceiling the government sets, unless employee and employer jointly opt to contribute on more.^5,6 An employee may also choose to pay in more, up to their wages after permitted deductions.^7,8

Part of the employer's share, up to eight and one-third percent of wages, goes to the Employees' Pension Scheme, which has its own block below.⁹ Some establishments are exempted and run their own provident funds instead; the analysis below applies to them too, though their rules can differ.¹⁰

A foreign trust, on our reading.

The Provident Fund vests in, and is administered by, the Central Board of Trustees,¹¹ and each member has an account, credited with interest at a rate the Central Government sets in consultation with the Board.¹² That fits the U.S. test for a trust: trustees holding property to protect or conserve it for the beneficiaries.¹³ No IRS guidance addresses the EPF, but IRS counsel treated Singapore's Central Provident Fund, a government fund held in trust with an account for each employee, as a §402(b) employees' trust.¹⁴ A fund governed by Indian law and run in India meets neither test for a domestic trust, so it is foreign.^15,16

We read it as a §402(b) employees' trust; your compulsory share counts as your employer's.

No IRS ruling addresses the EPF, though the IRS has ruled privately that a similar foreign fund, with mandatory employer contributions and personal accounts, is a §402(b) trust.¹⁷ We read the EPF as a §402(b) employees' trust: the employer must pay in for each employee,¹⁸ and a trust created outside the United States cannot be exempt under U.S. §501(a).¹⁹

On that reading, employer contributions are U.S. income to you in the year they are paid, to the extent they are vested,^20,21 and the foreign earned income exclusion cannot cover them.²² Your compulsory share is deducted from your wages because the law requires it,⁴ and the IRS's reading of a similar fund treats contributions like that as the employer's,²³ so you are not treated as owner of the part the employer's and your compulsory contributions fund.²⁴ If your wages were above the ceiling when you joined, you became a member by a joint written choice with your employer, and you stay one until you withdraw your balance.^25,6,26 Under the §401(k) rules, which apply here only as an analogy, a one-time irrevocable choice made on first becoming eligible is not a cash or deferred election,²⁷ so we count your compulsory share as your employer's in that case too. The argument the other way is that an amount contributed at an employee's election is the employee's.²⁸

Contributions you choose to make above the compulsory rate are your own, taxed as pay,^8,29 and once they exceed the contributions counted as your employer's, you are treated as owner of the part they fund.³⁰ No contribution to a §402(b) trust is a Part I event.³¹ Payouts are taxed under §72 when they are paid or made available to you,^32,33 and they stay off Part III if you report them as compensation income,^34,35 unlike payouts from a part you own.³⁶

If you are a highly compensated employee and one reason the fund is not exempt is that it fails the U.S. coverage tests, you include your vested balance, less what has already been taxed to you, in income each year instead.³⁷ No IRS guidance says whether the EPF fails those tests.

Rev. Proc. 2020-17: unlikely, since members can now withdraw most of the balance without giving a reason.

Rev. Proc. 2020-17 exempts an eligible individual (one who has filed U.S. returns and reported the fund's income as U.S. law requires)³⁸ from Forms 3520 and 3520-A for a retirement trust that meets its conditions.³⁹ The EPF meets four of them. It is tax-favored: the Code makes it a recognised provident fund under India's Income-tax Act, 1961,⁴⁰ which kept employer contributions of up to 12% of salary out of the employee's income and excluded the balance paid out after five years' service;^41,42,43 the Income-tax Act, 2025 replaced that Act from 1 April 2026 without, the tax authority says, changing the underlying tax policy.⁴⁴ Contributions come out of wages.^4,45 They are limited by a percentage of earned income: compulsory contributions are a percentage of wages, and voluntary ones may not exceed wages after permitted deductions.^3,8,46 And the employer must pay in for every employee of a covered establishment.^47,18

The withdrawal condition is likely not met. After 12 months' membership a member may withdraw everything above a minimum balance for illness, education, marriage, or housing, and twice a financial year in “special circumstances”,⁴⁸ for which, the Ministry of Labour says, no reason need be given.⁴⁹ A member may take the whole balance on retiring after 55, on permanent incapacity, on leaving India to settle or work abroad, on retrenchment or voluntary retirement, or after 12 months without covered employment.⁵⁰ Rev. Proc. 2020-17 accepts withdrawals for hardship, education, and buying a home,⁵¹ but a withdrawal with no stated reason, leaving the country, and losing a job are not among its examples. Reporting is open too: each member gives the fund their Indian tax number and gets a yearly statement,^52,53 but we found no rule requiring the fund to report members' accounts to India's tax authority each year.⁵⁴ With no IRS guidance on the EPF, Rev. Proc. 2020-17 is unlikely to cover it.

The proposed regulations, which you may rely on now if you apply them in full and consistently with related persons,⁵⁵ have the same withdrawal condition, so their value test, which can stand in for a contribution limit, does not help.^56,57

No deferral, and no treaty relief for a lump-sum payout.

The U.S.–India treaty does not defer U.S. tax on the fund's earnings or exclude contributions. Its private pension article covers pensions and annuities once paid,⁵⁸ and for a U.S. citizen or resident the saving clause lets the United States tax as if the treaty did not apply,⁵⁹ keeping, among a few others, the rules for social security and other public pensions, for child support, and for relief from double taxation.⁶⁰ An EPF payout is a lump sum, and the treaty counts only periodic payments as pensions; the Technical Explanation treats a lump sum from a pension plan as other income, which the saving clause leaves the United States free to tax.^61,62 Even where a treaty does defer tax, the IRS has said Forms 3520 and 3520-A still apply.⁶³

Little to file: Part II and Form 3520-A only if your voluntary contributions exceed your employer's and compulsory ones together.

Read as a §402(b) trust: no Part I for any contribution.³¹ No Part II or Form 3520-A for the part the employer's and your compulsory contributions fund; once your voluntary contributions exceed the contributions counted as your employer's, Part II and Form 3520-A each year for the part they fund.^24,30,64 No Part III for payouts from the employer-funded part that you report as compensation income;³⁴ payouts from a part you own go on Part III, lines 24 and 27.³⁶ No Form 4970: payouts from a §402(b) trust are taxed under §72, not under the trust distribution rules, and the income of a part you own is taxed to you each year.^32,65,66

If the fund is not treated as a §402(b) trust, the contributions you make are Part I transfers and you are treated as owner of the part they fund, so Part I, Part II, Form 3520-A, and Part III all apply.^67,68,64,69 Rev. Proc. 2020-17 and the proposed regulations would remove all of these for an eligible individual whose account qualified, but the withdrawal rules make that unlikely.^39,55,49 FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^70,71

The Employees' Pension Scheme, 2026 replaced the 1995 pension scheme on its publication in the Gazette dated 29 June 2026.⁷² Out of the employer's contribution, 8.33% of wages up to the wage ceiling goes to the Pension Fund, and the Central Government adds 1.16% of pay; members pay nothing in themselves.^73,74 Members have no account: after at least 10 years of service the scheme pays a monthly pension by formula, and a member who leaves with less service gets a lump-sum withdrawal benefit from a table.^75,76 The Central Government has the fund valued each year and may change the contribution rates and the benefits.⁷⁷

Not settled: a social insurance program of the Indian government, or a trust like the EPF.

Not settled. On one reading the scheme is a social insurance program of the Indian government rather than a trust: members hold no account, the Central Government pays in and may change the benefits,^74,77 and the U.S. Social Security Administration describes it as India's social insurance pension, separate from the provident fund.⁷⁸ The IRS does not count rights under a foreign government's social security or social insurance program as foreign financial assets for Form 8938.⁷⁹ On the other reading the Pension Fund is a trust like the EPF, since both funds vest in the Central Board of Trustees.^11,13 No IRS guidance addresses the EPS.

If it is part of a §402(b) trust, you pay nothing in, so you own no part of it.

If the scheme is part of a §402(b) employees' trust, your employer's contributions are U.S. income to you when paid, to the extent they are vested,^20,21 and since you pay nothing in yourself, you are not treated as owner of any part of it.^73,24 If it is a social insurance program, §402(b) does not reach it, since §402(b) covers an employer's contributions to an employees' trust.²⁰

Unlikely to apply, and needed only for the Part III question.

Not needed for Parts I and II, which do not apply on either reading. For the Part III question below, Rev. Proc. 2020-17 is unlikely to help: a member who leaves with less than 10 years' service can take a lump sum,⁷⁶ which is not among the withdrawals it accepts.⁵¹

A monthly pension is likely an Indian social security benefit, taxable only in India; a lump sum is not.

Under the treaty, social security benefits and other public pensions India pays to a U.S. citizen or resident are taxable only in India, and the saving clause does not override that.^80,60 The Technical Explanation's example is a U.S. citizen living in the United States who receives a social security benefit from the Indian government: that payment is exempt from U.S. tax.⁸¹ The stronger reading is that a monthly EPS pension is such a benefit: the scheme is made under India's Code on Social Security, the Central Government pays into it and can change it, and the SSA treats it as India's social insurance.^72,74,77,78 The other reading is that it is a private pension from an employment-based fund, which the United States may tax.^58,59 It is not settled. A lump-sum withdrawal benefit is not covered either way: the treaty counts only periodic payments as pensions.^61,62

No Part I, Part II, Form 3520-A, or Form 4970; Part III only in one case that is not settled.

No Part I: you make no contributions to the scheme,⁷³ and contributions to a §402(b) trust are not Part I events in any case.³¹ No Part II or Form 3520-A: on either reading you are not treated as owner of any part of it.^24,64 No Part III if the scheme is a social insurance program, or if you report the pension as compensation income.³⁴ If the scheme is a trust and you treat a monthly pension as exempt under the treaty, you do not report it as compensation income, so that exception may not apply and Part III could be due; this is not settled.⁶⁹ If you rely on the proposed regulations, their version of the exception does not count amounts a treaty exempts, so Part III is not due.^82,55 No Form 4970: payouts from a §402(b) trust are taxed under §72, not under the trust distribution rules.^32,65 FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^70,71

The National Pension System is a pension system regulated by PFRDA. An Indian citizen, resident or not, or an Overseas Citizen of India aged 18 to 85 may subscribe voluntarily,⁸³ and employers enroll employees as government sector or corporate sector subscribers.⁸⁴

A foreign trust, on our reading.

NPS Trust was set up under the Indian Trusts Act, 1882, is the registered owner of the system's assets, and holds them for the subscribers, who remain their beneficial owners,^85,86,87 which fits the U.S. test for a trust.¹³ No IRS guidance addresses the NPS. Governed by Indian law and run in India, it meets neither test for a domestic trust.^15,16

Only an employer's contributions read as a §402(b) employees' trust.

§402(b) reaches only an employer's contributions to an employees' trust,²⁰ so an employer's contributions to your account read as in the EPF block above, and you are not treated as owner of the part they fund.²⁴ A contribution the law requires to be deducted from your pay counts as your employer's,²³ and one you choose to make is your own.²⁹ What you pay in yourself makes you owner of the part it funds.⁶⁸ That is not settled where an employer also pays in: the account may then be a §402(b) trust as a whole, and, as for the EPF, your contributions would not be Part I transfers and you would own a part only once they exceed the employer's.^31,30 This guide takes the cautious course of treating your own part as yours.

Unlikely under both: joining turns on citizenship, not earnings, and a subscriber may leave after 15 years at any age.

Rev. Proc. 2020-17 needs contributions only from earned income,⁴⁵ while the NPS lets any eligible citizen subscribe voluntarily, on conditions of citizenship and age, not earnings,⁸³ so it is unlikely to cover the NPS. Since 16 December 2025 a subscriber may also leave after 15 years in the system, at any age, using only 20% of the balance to buy an annuity,⁸⁸ which is not a retirement age, disability, or death.⁵¹ The proposed regulations need contributions only “generally” from earned income and let a value test stand in for a contribution limit,^89,57,55 but they have the same withdrawal condition,⁵⁶ so they are unlikely to cover the NPS either.

No deferral, and no effect on reporting.

Same as the EPF: no deferral, and no effect on reporting.^58,59,63

Full reporting for the part you fund; the §402(b) reading for an employer's part.

For the part you fund: each contribution is a Part I transfer, and you are treated as owner,^67,68 so Part II and Form 3520-A are due each year,⁶⁴ and payouts from it go on Part III.⁶⁹ If the trust does not file Form 3520-A, you attach a substitute to your Form 3520.⁹⁰ For an employer's part, read as a §402(b) trust: no Part II or Form 3520-A for it, and no Part III for payouts you report as compensation.^24,34 No Form 4970 either way: the income of a part you own is taxed to you each year, and §402(b) payouts are taxed under §72.^66,32 An eligible individual whose account qualifies under the proposed regulations files none of these.⁵⁵ FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^70,71

A PPF account is an account under the Public Provident Fund Scheme, 2019, a government savings scheme made under the Government Savings Promotion Act, 1873.⁹¹ An individual opens the account and deposits ₹500 to ₹1.5 lakh a year, interest is credited at the end of each year, and the account may be closed after 15 years.^92,93,94,95

Not a trust, on our reading.

The scheme is made under the Government Savings Promotion Act, 1873, which treats the money as a deposit in a government savings bank, with interest at a rate the Central Government sets;^96,97 the scheme gives the account holder an account to deposit into, on which interest is credited, and sets up no trustee to hold the deposits.^92,94 A trust for U.S. purposes needs trustees who take title to property for the beneficiaries,¹³ and Indian law describes a trust the same way, as an obligation annexed to the ownership of property for the benefit of another.⁸⁷ No IRS guidance addresses the PPF.

Does not apply.

§402(b) does not apply: the account holder, not an employer, makes the deposits,⁹² and §402(b) reaches only an employer's contributions to an employees' trust.²⁰

Not needed if it is not a trust.

If the account is not a trust, §6048 does not reach it and no exemption is needed;⁶⁷ on that reading it also does not count toward the proposed regulations' value test, which adds up the value of your trusts in India.⁵⁷ If it were treated as one, Rev. Proc. 2020-17 would be unlikely to cover it, because deposits need not come from earned income.^45,92

No deferral.

No treaty provision defers or exempts U.S. tax on PPF interest.⁵⁹

No Form 3520 or 3520-A, on our reading.

On our reading, no Part I, Part II, Form 3520-A, or Part III, and no Form 4970: Form 3520 and Form 3520-A report foreign trusts, and a PPF account is not one.^67,64,69 FBAR (FinCEN Form 114) and Form 8938 are separate, and an exemption from Forms 3520 and 3520-A does not remove them.^70,71

A private trust under the Indian Trusts Act, 1882, set up during someone's life or by their will, in which a trustee holds property for family members.⁸⁷ If the trustee mainly runs a business for profit rather than holding property for the family, U.S. law may classify the arrangement as a business entity rather than a trust.⁹⁸

Usually a foreign trust.

Usually an ordinary trust, because the trustee holds property for the beneficiaries,¹³ and a foreign trust, because it is governed by Indian law and administered in India.^15,16

A U.S. person who funds it is owner when it has a U.S. beneficiary; a foreign settlor only in two narrow cases.

Who is treated as owner decides who files Part II and Form 3520-A. A U.S. person who transfers property to the trust is treated as owner of the part it funds for any year in which the trust has a U.S. beneficiary.⁶⁸ Someone who funds the trust while not a U.S. resident and becomes one within 5 years is treated, for this rule and for Part I, as transferring that part of the trust on the day their U.S. residency starts.⁹⁹ A settlor who is not a U.S. person is treated as owner only if they can revoke the trust alone, or if only they or their spouse can receive distributions during their life.¹⁰⁰ Otherwise no one is owner, and the trust is taxed as a separate, non-grantor trust.¹⁰¹

No relief.

The saving clause lets the United States tax its citizens and residents as if the treaty did not apply,⁵⁹ and none of the provisions it spares concerns foreign trust reporting.⁶⁰

Part I for whoever funds it, Part II and Form 3520-A for an owner, Part III for whoever receives a distribution.

A U.S. person who transfers property to the trust files Part I for that year.⁶⁷ A U.S. owner files Part II and makes sure Form 3520-A is filed, or files a substitute, each year.^64,90 A U.S. beneficiary who receives a distribution files Part III for that year.⁶⁹ A distribution from a non-grantor trust that carries out income the trust kept in earlier years is an accumulation distribution, taxed with an interest charge on Form 4970.¹⁰² Rev. Proc. 2020-17 does not apply: it covers only retirement trusts and medical, disability, or educational savings trusts.¹⁰³ FBAR (FinCEN Form 114) and Form 8938 are separate and may also apply.¹⁰⁴