I work in the US (H1-B status). I have an NRE account with ICICI bank. I have some questions regarding this.

a. Is the interest earned on this account taxable in the US? If so, what are the forms that I need to fill out for this?

b. Should I declare this account information to the IRS while filing taxes

A U.S. resident or citizen must report worldwide income.

Yes, you should include the income on your U.S. tax return. If the balance of the account exceeds $10,000 at any time during the year, you should complete Form TD F 90-22.1 and check "yes" at the bottom of Schedule B to Form 1040. There is a $10,000 penalty for failing to file Form TD F 90-22.1.

Yes, you should include the income on your U.S. tax return. If the balance of the account exceeds $10,000 at any time during the year, you should complete Form TD F 90-22.1 and check "yes" at the bottom of Schedule B to Form 1040. There is a $10,000 penalty for failing to file Form TD F 90-22.1.

It is not clear if a person who has become "Resident for Tax Purpose" is required to File Form TD F 90-22.1.
The instructions say the every United States Person must file this form if .... under Department of Treasury Regulation 31 CFR 103.

You seem to be suggesting that because the law is unclear, there is no need to mention the existence of Form TD F 90-22.1, and that resident alien individuals should risk not filing it. I can't imagine why resident alien individuals would want to risk the $10,000 penalty by not filing this simple form.

Further, it seems quite clear to me that resident alien individuals are required to file Form TD F 90-22.1. Internal Revenue Code Section 7701(a)(30) defines the term "United States person" as "a citizen or resident of the United States . . . " I am not sure what is unclear in this definition. If your argument is that the requirement to file Form TD F 90-22.1 is under a different title of the United States Code (Title 31) than the Internal Revenue Code (Title 26), I think that this is a very weak argument.

Further, the website of the section of the Treasury Department that administers the filing of Form TD F 90-22.1 (FINCEN, or Financial Crimes Enforcement Network) provides the same definition of a United States Person. See Regulatory: BSA Compliance Information (http://www.fincen.gov/reg_fbar.html) .