Donald Trump's ‘One Big Beautiful Bill Act': How tax on remittances are set to impact Indians in US

Mint

5 hours ago

Several provisions in Donald Trump's 'One Big, Beautiful Act' raise taxes on immigrants. That includes a new 1 percent tax on transfers of money to foreign countries like India, known as remittances. Many immigrants in the US send money to relatives in their countries of origin.
As per the 'One Big, Beautiful Act', signed by Trump on Friday during a July 4 White House picnic, migrants and others who send money abroad would be taxed at 1 percent of the amount of the transfer.
The Act states: 'There is hereby imposed on any remittance transfer a tax equal to 1 per cent of the amount of such transfer… The tax imposed by this section… shall be paid by the sender.'
As per the rule, the tax will apply to transfers made via cash, money orders, or cashier's checks. However, transfers made from financial institutions or funded through debit/credit cards issued in the US will be exempt.
Those using a 'qualified remittance transfer service' will also be exempt.
The remittance tax rate was originally set at 5% but it was reduced to 1% in the final version of the Bill — easing concerns among millions of Non-Resident Indians.
The rule applies to US residents who aren't citizens, including Green Card holders, H-1B and H-2A visa holders, and international students.
This provision in the 'One Big, Beautiful Act' raises the cost for Indians in the US to send money back home.
Remittances have long been a critical source of income for low- and middle-income countries, and have continued to exceed foreign direct investment (FDI) flows and ODA combined.
According to the Reserve Bank of India's March Bulletin, 'The share of the US in India's total remittances remained the largest, rising to 27.7 percent in 2023-24 from 23.4 per cent in 2020-21.'
Meanwhile, the World Bank said in December 2024 that India received a record $129 billion in remittances, the highest in the world, with 28 per cent of that coming from the US alone.
There are nearly 54 lakh overseas Indians in the US, including about 33 lakh Persons of Indian Origin (PIOs), according to Ministry of External Affairs' data.