Good news for NRI! US brings BIG change in proposed remittance tax in 'One Big, Beautiful Bill', levy reduced from 3% to...

US has officially slashed down the proposed remittance tax from 3.5% to just 1% in the latest draft of the 'One Big, Beautiful Bill', giving a much awaited relief to the NRIs (Non Residents Indian). It will cut down the financial burden significantly on the NRIs who send money back home to support their families living in India. 

'One Big, Beautiful Bill', endorsed by US president Donald trump himself has initially proposed 5% taxes on international money transfers made by non-US citizens. Later, it was revised and brought down to 3.5%. Now, the Senate has brought it down further to just 1%.  Starting from December 31, the levy will be imposed on the physical transfers, like cash payments, money order, cashier's cheques. The digital transfers from bank accounts, credit/debit cards and others, will be exempted of any tax, as per the provisions in the bill.

Big relief for Indian Diaspora in the US

This reduction on taxes will benefit over 2.9 millions Indians living in the US, who send money to their homes. The earlier version of the bill with 5% taxes triggered anxiety in the NRIs, especially people who were sending huge amounts of money to their families in Kerala, Uttar Pradesh, etc., and in families whose sole earners were living in the US. As per MEA, there are 45 lakh Indians in US, with 32 lakh Person of Indian origins, hence, if the 5% tax would have been imposed, it would have cost the Indian Diaspora $1.6 billion annually, as per Global trade Research. It would have also triggered the rupees to fall from Rs 1 to Rs 1.5 against the US dollars.

India is the world's largest recipient of remittances. India received $118.7 billion in remittances during the financial year 2023-24. The country received $32 billion or nearly 28% from the US alone, as per RBI. The country get most of its remittances from the advanced countries like Australia and UK, as most skilled professional relocates their for jobs.

However, Indians holding H-1B VISA (those working in STEM fields), L-1 visa holders, Indian green card holders, permanent residents will still be affected from the proposed 1% tax, as many of them use physical methods to send money. However, bank-to-bank transfers, transfers via popular platforms like Remitly, Wise, western Union, will not fall under the tax rule, as per ET.