August 2025
The content published by DR has been a great help before our move back to India.
Resource Hub / PFIC Guide
For US Taxpayers Investing in India
Free PFIC Guide Indian Funds, Form 8621, and the Section 1291 Trap
Understand how US rules treat an India-domiciled fund before you start investing.
Covers the two PFIC tests, why Indian mutual funds and Indian stocks are treated differently, the Section 1291 excess-distribution regime, the Form 8621 reporting burden, the QEF and mark-to-market elections, and the US-born-child case.
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Why this roadmap
Know how the investment is treated before you own it
An India-domiciled mutual fund can generally be a PFIC for someone who is still a US taxpayer, which changes the tax treatment and adds an annual reporting obligation. A directly held Indian operating company usually is not — the test depends on the entity's own income and assets, not on the fact that it is foreign. This guide sets out that distinction, what the reporting involves, and the questions worth asking before any purchase.
Written From the Video
The same ground as our PFIC explainer, in a form you can re-read and hand to your CPA.
Decide Before You Buy
PFIC is far cheaper to plan around than to unwind after years of monthly purchases.
Nine steps, one sequence
1
Confirm whether you are still a US taxpayer
Citizen, green card holder, or US tax resident — the answer changes everything below.
2
Identify what you actually hold
A pooled fund and a single operating company are treated differently.
3
Check where each investment is domiciled
Indian exposure through a US-domiciled fund is not the same purchase.
4
Understand the default Section 1291 treatment
Gains can be allocated across holding periods, with an interest charge.
5
Count the Form 8621 reporting
Several funds with monthly SIPs becomes a real annual exercise.
6
Ask whether an election is even available
QEF needs data the fund may not publish; mark-to-market has its own conditions.
7
Review investments held in a child's name
A US-born child is a US taxpayer wherever they live.
8
Review what you already owned before moving
Purchase date and tax status at purchase both matter.
9
Decide the structure before the money moves
Plan the investment with both tax lenses on, not one at a time.
On camera
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August 2025
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August 2025
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AFTER THE GUIDE
A guide explains the rule. A call applies it to your actual portfolio.
If the guide surfaces a holding you are unsure about, book a cross-border taxation consultation and go through it with someone who works on both sides.
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