5% tax on remittances outside US to add financial pressure to NRIs

US President Donald Trump’s One Big, Beautiful Bill, which has been cleared by the US House of Representatives and now advanced to the Senate, will add financial pressure on Indian nationals working in the US.

 The bill which contains a remittance tax of 5% on non-US citizens will impact the flow of funds to countries like India.  “There can be a decline in gross remittance thus impacting rupee stability in the long-run. The US has been one of the largest contributors to India’s share of funds from diaspora remittance for years. Most of the immigrants in the US are non-citizens thus it will impact the majority of them,” said Saurrav Sood- Practice Leader- International Tax & Transfer Pricing at SW India.

 He added that it will be interesting to see how India deals with it at the WTO level, whether it can be challenged on grounds of unfair practice or unilateral measures impacting fair trade policies norms.

 According to RBI data, India’s remittances from the US stood at $33 billion in FY24. If the bill is enacted, then India might need to forego $1.65 billion in remittances.