EPF, NPS, and PPF: The Complete U.S. Tax and Reporting Guide for Indian Immigrants (2026)

EPF, NPS, and PPF are the three accounts almost every Indian immigrant on an H-1B visa or green card leaves running back home and nearly everything published about their U.S. tax treatment makes the same mistake: it treats all three as one problem. They aren’t. Under U.S. tax law, EPF, PPF, NPS Tier I, and NPS Tier II each fail and pass different legal tests, and the differences change your actual filing obligations, not just the fine print.

This guide breaks each account down individually trust classification, PFIC exposure, and whether Revenue Procedure 2020-17 can get you out of Form 3520 entirely then does the same for Nepal’s equivalent accounts (EPF/SSF and the Citizen Investment Trust), which almost nothing online covers at all. Every claim here is tied to a specific Internal Revenue Code section, Treasury regulation, IRS revenue procedure, or the actual treaty text not “consult a tax professional” hand waving.

Before anything else: this is genuinely unsettled territory in places. Where the law is contested, we say so, show you both positions, and tell you which one we think is stronger and why instead of pretending there’s a single settled answer.

The Quick Reference Table

Read this first. It’s the answer most articles never actually give you.

Why “Indian Retirement Account” Isn’t One Topic

Every generic guide asks one question: “Is my Indian retirement account taxable?” That’s the wrong question. The right analysis runs each account through four separate tests:

1. Is it a trust? Under Treas. Reg. §301.7701-4(a), a trust requires a trustee holding property to protect and conserve it for beneficiaries. A direct claim against a government for a deposit no trustee, no trust deed isn’t a trust. This is the fork in the road that separates PPF from everything else.
2. Does it hold PFICs? Under IRC §1297, a Passive Foreign Investment Company has to be a foreign corporation. A statutory provident fund isn’t one. A pension fund manager pooling your contributions into equity and debt schemes looks a lot more like one.
3. Does it clear Revenue Procedure 2020-17? This is the exemption almost no one writes about and it can eliminate Form 3520/3520A entirely for a “tax favored foreign retirement trust.” Full breakdown below.
4. Does a tax treaty help and does the Saving Clause undo it? The U.S. India treaty has real pension relief written into it. The Saving Clause claws most of it back for U.S. citizens and green card holders. Not all of it.

Run EPF, PPF, NPS Tier I, and NPS Tier II through those four questions and you get four different answers. That’s the whole article.

EPF (Employees’ Provident Fund)

EPF is a mandatory, employer linked scheme under the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 both employer and employee contribute, typically 12% of basic wages each. Assets sit with the Central Board of Trustees, a named fiduciary body. That’s a trust under U.S. law.

Because it doesn’t satisfy the coverage and nondiscrimination tests under IRC §402(b), EPF is a nonexempt employees’ trust. Two separate questions follow from that:

Are contributions taxable when made? Yes, generally under §402(b)(1), employer contributions are includible under IRC §83 once your interest vests. In practice this matters most if you’re actively contributing to EPF while already a U.S. tax resident (a dual status year, or continuing Indian employment after your H-1B starts). For the far more common case an EPF balance built up entirely before you moved, sitting dormant with no new contributions since there’s nothing new to include under §83; the only live question is what happens to the interest it keeps earning.

Is that ongoing interest taxable every year, or only when you withdraw? This is where §402(b)(4)(A) matters, and where a lot of guidance including generic “EPF interest is taxable as it accrues” advice oversimplifies. That rule requires Highly Compensated Employees under IRC §414(q) to include the annual increase in their vested accrued benefit every year. If you’re not an HCE (roughly: not a 5%+ owner and under the indexed compensation threshold, currently in the $155,000–$160,000 range), the basic §402(b)(2) rule defers taxation of trust earnings until actual distribution. Most H-1B and green card holders are not HCEs. That’s a real, defensible argument for deferral not a loophole, a straight reading of the statute.

Does EPF need Form 3520?

This is the section almost nothing online gets right, because almost nothing online mentions Revenue Procedure 2020-17 at all. It exempts “eligible individuals” from Form 3520/3520A for a trust that clears six tests:

The contested test is the contribution cap, and it’s the highest value open question in this entire article. Section 5.03(4) of Rev. Proc. 2020-17 is written as three alternatives, not one: contributions are limited by (a) a percentage of earned income, OR (b) an annual cap of $50,000, OR (c) a lifetime cap of $1,000,000. EPF’s structure a fixed 12% of basic wages from each side is a textbook “limited by a percentage of earned income” arrangement, regardless of what dollar figure that percentage produces for a given salary.

Read that way, EPF passes test 4 and clears all six meaning no Form 3520 or 3520A. Nobody has tested this reading against the IRS. The conservative alternative reading requires the resulting dollar amount to also stay under the $50k/$75k figures used elsewhere in the procedure. If your 12%+12% has pushed past that in dollar terms, get a specialist’s opinion before relying on the exemption.

Either way, this exemption only touches §6048 reporting. FBAR and Form 8938 are governed by an entirely separate statute (§6038D) and apply regardless.

What about the treaty?

Under the U.S. India tax treaty, private pensions fall under Article 20(1) taxable only in the country of residence. Problem: Article 20(1) isn’t on the short list of provisions excepted from the Saving Clause (Article 1(3)), so for U.S. citizens and green card holders, the U.S. taxes it anyway. Some practitioners argue EPF should instead be treated as “social security” under Article 20(2) which is excepted from the Saving Clause for everyone, citizens included, because EPFO is a mandatory, government run scheme for the organized sector. If that argument holds, EPF growth escapes U.S. tax entirely, claimed on Form 8833. The IRS has never ruled on it either way. Treat it as an aggressive position, not a settled one.

PPF (Public Provident Fund) The Most Disputed Account

PPF is where the split in the research gets real, and where you need to make a deliberate editorial call rather than pretend the question is settled.

The stronger reading: PPF isn’t a trust at all. There’s no trust deed, no named trustee, no fiduciary standing between you and the government. You open an account, deposit money, and the Government of India owes you that balance plus a declared interest rate the same basic structure as a savings bond or a bank CD. Under Treas. Reg. §301.7701-4(a)’s actual test (a fiduciary conserving property for beneficiaries who aren’t running the show themselves), PPF simply doesn’t qualify. If it’s not a trust, §6048 never turns on, and the entire Rev. Proc. 2020-17 pass/fail analysis is irrelevant there’s nothing to be exempted from.

The conservative counter position: some practitioners analyze PPF as a trust anyway and walk it through Rev. Proc. 2020-17’s tests where it fails both available paths. It fails the retirement trust test because contributions aren’t limited to earned income: any Indian resident can open a PPF account, including for a non earning spouse or a minor grandchild, and the test asks what the plan design permits, not what you personally happened to contribute.

It also fails the non retirement savings trust test, because withdrawals aren’t restricted to medical, disability, or education needs PPF allows penalty free partial withdrawal after year seven for any reason. Under this reading, Form 3520 and 3520A are mandatory, with $10,000 statutory minimum penalties per form, per year, for non disclosure.

We lead with the “not a trust” position because it’s the better reading of the actual legal test. But this is a live, unresolved split among cross border practitioners not a settled call and it’s exactly the kind of fact pattern where a protective Form 3520 filing, or a specialist opinion in writing, is worth the cost given what’s at stake if an examiner takes the other side.

What’s not disputed: PPF interest is fully taxable every year as ordinary income under IRC §61(a)(4) and §451, reported on Schedule B, regardless of India’s tax free treatment and regardless of the 15 year lock in. FBAR and Form 8938 apply without exception. And there’s no treaty relief Article 20 requires an employer employee pension relationship, which a self funded PPF account doesn’t have.

NPS Tier I

NPS operates through the PFRDA under a genuine trust deed, no dispute here, it’s a trust. The twist is that it’s also a trust holding PFICs: contributions flow through Pension Fund Managers into pooled equity, corporate debt, and government securities schemes, and those pooled vehicles are foreign corporations for U.S. purposes under §1297.

That means NPS Tier I potentially carries a double reporting burden trust reporting under §6048, and PFIC reporting under §1291/§1298 for each underlying scheme. Rev. Proc. 2020-17 can eliminate the first. NPS Tier I typically clears all six tests: tax favored under Section 80CCD, PFRDA reported, earned income contributions, the age 60 lock plus mandatory partial annuitization satisfies the withdrawal test, and while there’s no absolute statutory dollar ceiling, actual voluntary contributions under the tax incentivized limits typically stay under the $50k/$75k thresholds so the contribution cap test usually passes on the facts, even without needing EPF’s more aggressive percentage based argument.

Clearing Rev. Proc. 2020-17 does not clear Form 8621. The underlying PFIC funds still need to be reported annually, one Form 8621 per scheme, taxed under the punitive excess distribution regime unless you make a mark to market election under IRC §1296 and that election itself requires the units to be “regularly traded” on a recognized exchange, which is genuinely unsettled for NPS units. Don’t assume MTM is available without confirming this first.

Government NPS vs. private NPS the distinction almost everyone misses

If your NPS account exists because you were a mandatory enrollee as an Indian government employee, it’s governed by Article 19 (government service pensions) taxable only in India, and that protection survives the Saving Clause, but only for people who are neither U.S. citizens nor green card holders. On an H-1B, your government NPS growth is exempt from U.S. tax. The day you get a green card, that exemption disappears and the Saving Clause taxes it in full.

If your NPS is voluntary private sector, self employed, or the “All Citizens” model it falls under Article 20(1) instead, which is subject to the Saving Clause from day one regardless of your immigration status. You can claim a Foreign Tax Credit on Form 1116 against Indian tax on actual distributions, but there’s no deferral on the annual PFIC accrual. This exact mandatory vs voluntary split is confirmed independently across three separate rounds of research for this article treat it as solid.

NPS Tier II

Tier II is the account version of NPS with none of the guardrails: no lock in, withdraw anytime for any reason, no penalty. It runs through the same fund managers and the same underlying PFIC schemes as Tier I, so the PFIC and Form 8621 exposure is identical. But it fails Rev. Proc. 2020-17’s withdrawal condition test outright there’s no age, disability, or death condition to satisfy and it generally doesn’t carry Tier I’s tax favored contribution treatment either.

Practical result: Tier II is the one NPS account where you should assume Form 3520 and 3520A apply on top of Form 8621 per fund, on top of FBAR and Form 8938. It’s the single worst compliance profile of any account in this guide, and it’s also where “NPS” as an undifferentiated topic does the most damage because most guidance never separates Tier I from Tier II at all.

Nepal’s Equivalent Accounts

India dominates the search volume, but a meaningful share of readers here are Nepali, and there is essentially zero U.S. tax commentary anywhere on Nepal’s retirement accounts. That gap is real, and it’s worth understanding clearly, partly because the analysis is actually simpler in one respect: there is no U.S. Nepal tax treaty at all, so there’s no Saving Clause detour, no treaty article to fight over just the straight trust/PFIC/reporting analysis on U.S. domestic law alone.

Nepal EPF / Social Security Fund (SSF)

Nepal’s Karmachari Sanchaya Kosh (EPF) and the newer Social Security Fund run on the same logic as Indian EPF: mandatory, percentage of wage employer and employee contributions into a statutory trust, invested in bank deposits, government bonds, and domestic infrastructure rather than pooled equities so no PFIC exposure. The same contested contribution cap question applies here as it does to Indian EPF (percentage of wages vs. dollar caps under Rev. Proc. 2020-17 §5.03(4)), and the same HCE/non HCE split governs whether ongoing growth is taxed annually or deferred until distribution. FBAR and Form 8938 apply regardless.

One genuine open compliance problem: the SSF is a pooled, tripartite fund without individual account balances in the way a Western defined contribution plan has one, which makes valuing your interest for FBAR and 8938 purposes a real, unresolved practical question get a specialist’s help estimating this rather than guessing.

Nepal Citizen Investment Trust (CIT)

CIT Nagarik Lagani Kosh is different: it’s empowered to invest in equities and manage mutual fund style schemes, so it clearly holds PFICs, and Form 8621 applies per underlying fund. On the trust reporting side, though, CIT is one of the cleaner “likely exempt” cases in this whole guide: Nepal’s Income Tax Act caps contributions to approved retirement funds at the lesser of one third of taxable income or roughly $2,250 (NPR 300,000) a year comfortably under the $50,000 threshold in Rev. Proc. 2020-17, satisfying the contribution cap test on the clean dollar reading without needing any aggressive argument.

Combined with employer linked nondiscrimination and a retirement conditioned withdrawal structure, CIT generally clears Form 3520/3520A exemption. Form 8621 for the underlying funds still applies.

The Complete Reporting Stack

Four different reporting regimes can apply to the same account, for different reasons, on different forms:

• FBAR (FinCEN 114): Required if your combined foreign accounts exceed $10,000 at any point in the year. Applies to every account in this guide, no exceptions, regardless of trust or PFIC status.
• Form 8938: A completely separate statute (§6038D) from foreign trust reporting, with its own thresholds ($50,000/$75,000 for single filers in the U.S.; higher living abroad). Full FBAR vs 8938 comparison from the IRS. Rev. Proc. 2020-17 does not touch this obligation at all even a fully exempt trust still needs Form 8938 if you’re over the threshold.
• Form 3520 / 3520A: Foreign trust reporting under §6048. This is what Rev. Proc. 2020-17 and the still proposed 2024 regulations can eliminate but only for accounts that (a) are trusts to begin with, and (b) clear all six tests.
• Form 8621: Required per PFIC, every year you hold one, independent of everything else above. NPS Tier I, NPS Tier II, and Nepal CIT all trigger this. EPF, PPF, and Nepal EPF/SSF do not, because none of them are foreign corporations.

The proposed regulations that would modernize Rev. Proc. 2020-17 remain unfinalized as of mid 2026, reportedly stalled by a broader freeze on new federal rulemaking, with no announced timeline. Taxpayers can currently elect to rely on the proposed rules if applied consistently and in full but “proposed” means exactly that. Don’t build a filing position on a rule that isn’t final yet without a backup plan.

Worked Example: What Non Compliance Actually Costs

Meera is a single H-1B holder living in Texas, earning $95,000 a year comfortably under the Highly Compensated Employee threshold. Before moving to the U.S., she built up EPF, PPF, and NPS Tier I balances in India. She’s made no new contributions since arriving; the accounts just sit and earn interest. She didn’t know she had to report any of it.

(Approximate USD figures at roughly ₹84/$1 the real world numbers would run a bit above ₹30 lakh in EPF alone by 2025.)

Back tax on unreported growth. Because Meera isn’t an HCE, her EPF growth is deferred under §402(b)(2) not currently taxable. Only PPF and NPS Tier I growth is taxable each year, at her 24% marginal rate:

• 2023: $1,000 (PPF) + $1,200 (NPS) = $2,200 taxable → $528 tax
• 2024: $1,050 + $1,300 = $2,350 taxable → $564 tax
• 2025: $1,150 + $1,450 = $2,600 taxable → $624 tax

Total back tax: $1,716, plus statutory interest under §6621. Compare that to the conservative approach many guides default to taxing EPF growth too, every year, regardless of HCE status which would run the same three years to $3,660, more than double. Getting the HCE analysis right isn’t academic; it’s real money.

The correction that matters: use December 31, not the highest balance during the year. The Streamlined Domestic Offshore Procedures penalty is based on the highest year end aggregate value across the lookback period a single date, once per year, for each of six years. Some guidance calculates this off each account’s own peak intra year value instead, which is the wrong basis under the IRS’s own instructions.

For fixed rate accounts like EPF and PPF that barely fluctuate within a year, the dollar difference may be small; for the equity linked portions of NPS or Nepal’s CIT, where unit prices genuinely move intra year, using the wrong basis can meaningfully overstate what you owe. Get the methodology right regardless it’s also far less work than hunting for a true intra year maximum across four accounts and six years.

Using the correct year end basis, Meera’s highest aggregate value across this period is 2025’s $67,250:

SDOP Title 26 Miscellaneous Offshore Penalty: 5% × $67,250 = $3,362.50.

Compare that to what an IRS examination could look like if she’s found before she files under the Streamlined Domestic Offshore Procedures: non willful FBAR penalties capped at $10,000 per year (not per account, per Bittner v. United States) $30,000 across three years. Form 8938 penalties of $10,000 per year another $30,000. And if an examiner takes the conservative position that PPF is a trust that fails Rev. Proc. 2020-17, statutory minimum Form 3520 and 3520A penalties of $10,000 each, per year another $60,000. Total audit exposure: roughly $120,000, against an SDOP penalty of $3,362.50 plus about $1,716 in back tax and interest. That gap is the entire argument for getting compliant before you’re found, not after.

Fixing Past Non Compliance

If any of this describes an account you’ve never reported, the Streamlined Domestic Offshore Procedures exist specifically for non willful cases like this three years of amended returns, six years of delinquent FBARs, one 5% penalty in place of the statutory maximums above. It’s worth reading alongside our guides on PFIC rules, FATCA and Form 8938, and how U.S. tax treaties actually work before you file anything.

Frequently Asked Questions

Is EPF taxable in the US?

The vested balance itself isn’t separately taxed on transfer if it was built up before you became a U.S. tax resident. Ongoing growth is taxable annually only if you’re a Highly Compensated Employee under §414(q); otherwise it’s generally deferred until distribution. FBAR and Form 8938 apply regardless of income level.

Do I need to report my PPF account to the IRS?

Yes for FBAR and Form 8938 that part isn’t in dispute. Whether Form 3520 applies depends on whether PPF counts as a trust at all, which is a genuinely unsettled question among practitioners; the stronger reading is that it doesn’t.

Is NPS a PFIC for US tax purposes?

NPS Tier I and Tier II both hold PFICs, because contributions flow into pooled equity and debt schemes managed by pension fund managers that’s a foreign corporation for §1297 purposes. EPF and PPF are not PFICs; neither is a foreign corporation.

Does Revenue Procedure 2020-17 exempt EPF from Form 3520?

Possibly, on the strongest reading of its contribution cap test EPF’s percentage of wages structure can satisfy that test independent of any dollar limit. This specific position hasn’t been tested against the IRS and should be confirmed with a cross border specialist before you rely on it.

What’s the difference between NPS Tier I and Tier II for US taxes?

Both carry the same PFIC exposure. Tier I’s retirement age lock in can satisfy Rev. Proc. 2020-17’s withdrawal test, generally exempting it from Form 3520. Tier II has no withdrawal restriction at all, fails that test, and typically needs Form 3520/3520A in addition to Form 8621.

Can I use the US India tax treaty to avoid tax on my NPS or EPF?

Only in narrow cases. A mandatory government employee NPS account is protected under Article 19 but only while you’re a nonimmigrant (H-1B, not green card). Private or voluntary NPS and EPF fall under Article 20(1), which the Saving Clause fully overrides for U.S. citizens and green card holders.

Do I need to file Form 8938 for my Indian PPF, EPF, or NPS accounts?

Yes, if your specified foreign financial assets exceed the threshold for your filing status and residency. Form 8938 is governed by a separate statute from Form 3520, and no exemption from foreign trust reporting affects it.

What happens if I never reported my EPF, PPF, or NPS accounts?

If it was non willful, the Streamlined Domestic Offshore Procedures cap your penalty at 5% of the highest year end aggregate balance across the lookback period, plus back tax and interest dramatically less than the statutory penalties an IRS examination could otherwise impose.

Are Nepali EPF, SSF, and CIT accounts taxed the same way as Indian accounts?

The underlying legal tests are the same, but there’s no U.S. Nepal tax treaty, so there’s no Saving Clause complexity either way. Nepal EPF/SSF don’t hold PFICs; the Citizen Investment Trust does and generally clears the Form 3520 exemption cleanly given Nepal’s low statutory contribution cap.

Should I get professional help for EPF, NPS, or PPF reporting?

For anything beyond FBAR and Form 8938 specifically the PPF trust question and the EPF contribution cap position yes. These are genuinely contested areas of law where the dollar stakes of guessing wrong are high enough to justify a specialist’s written opinion.

Disclaimer

This article is provided for general informational and educational purposes only. It does not constitute tax, legal, accounting, or financial advice. The information contained herein is based on the authors’ understanding of U.S. tax laws, IRS guidance, and the U.S. India tax treaty as of mid 2026 and is subject to change.

HonestMoneyAdvice and its authors make no representations or warranties regarding the accuracy, completeness, or reliability of this content. Tax rules are complex and interpretations can vary. Certain positions discussed in this guide (including the application of Revenue Procedure 2020-17, trust classification of PPF/EPF, and treaty benefits) are unsettled and have not been formally ruled on by the IRS or courts.

You should not rely on this article as a substitute for professional advice. Any reliance on the information provided is strictly at your own risk. HonestMoneyAdvice, its owners, writers, and affiliates shall not be liable for any loss, damage, penalty, additional tax, interest, or expense (including attorney’s fees) incurred by any reader or third party as a result of using or relying upon this guide.

We strongly recommend consulting a qualified U.S. cross border tax attorney or certified public accountant (CPA) before taking any action based on this information.

This guide is for general informational purposes and reflects analysis of primary IRS, Treasury, and treaty sources as of mid 2026. Several positions described here most notably the EPF contribution cap argument under Rev. Proc. 2020-17 and the PPF trust classification questionare genuinely unsettled and have not been tested in court or ruled on by the IRS. Nothing in this article is individualized legal or tax advice. Foreign account, trust, and PFIC reporting carries significant civil and potential criminal penalty exposure; consult a qualified cross border tax attorney or CPA before relying on any position described here, particularly the aggressive readings flagged throughout.