Tax in USA on PPF in India

[harshalb]

Is there any tax in USA on interest earned by a US GC holder having PPF account in India? Should it be reported and when?

[txh1b]

What is a PPF account?

[immihelp]

PPF = Private Provident Fund

I believe it is a retirement account.

[ramabalaji]

PPF is a Public provident Fund scheme with financial year ending in 31st March. You can subscribe any amount in multiples of Rs5 between Rs 100/- and or Rs 70,000/- in a year to your account.You can pay once a month or total limit of 12 deposits or lump sum of maximum limit f Rs 70,000/- in a year.
You can avail loan any where between the 3rd financil year to the 6th financial year.
On completion of 15 years, you can withdraw the entire amount or you can continue to contribute if you so desire.
Subscription to PPF qualify for deduction from taxable income.
the present interst payable to this account is 8% compound interest paid after 31st March every year.
This is a popular tax saving scheme and recommended by financial gurus in India.

[txh1b]

Thanks for the explanation. If the OP is a GC holder, how/why does he have a PPF account? I am not sure if it is possible.

Regardless of it, IRS requires any foreign income to be declared on the returns. Whether it is taxable or not, depends on the tax treaties and a CPA can answer it best.

http://www.irs.gov/newsroom/article/0,,id=108276,00.html

[immihelp]

Well, it really depeneds upon whether it is considered retirement account from the US perspective.

Even if not, it also depends upon whether they are considered realized gains or not.

As txh1b said, you need to talk to the CPA who knows both US and Indian tax laws. And please post your findings here for the benefit of others.

[timepass]

PPF payout tax implications in the US

any updates on this?

[immihelp]

Effective July 25, 2003, NRIs are not eligible to open fresh accounts in any of the National Saving's Organization schemes, namely the post office savings, recurring deposit, monthly income scheme, senior citizens savings scheme accounts. They are also not allowed to purchase National Savings Certificates or Kisan Vikas Patras.

They cannot open a PPF account. Similary, the 8% RBI Savings Bonds are out of the bounds for NRIs.

The exsiting accounts (opened when the NRI was resident or opened before July 25, 2003 by NRI) can be continued up to their maturity, but cannot be renewed or extended. As and when the irregularity comes to the notice of the authorities, the money will be returnede to the depositor without any interest.

[timepass]

so is it taxable

thanks...so is the interest accrued on ppf considered capital gains when the ppf matures? this is for US federal tax...or should we treat it as income...