Big, Beautiful rollback: US lowers remittance tax to 3.5%, easing NRIs and H-1B workers burden, how it will impact India

Hindustan Times

24-05-2025

In a huge comfort for the majority of NRIs in the US, the tax on remittances established by US immigrants has been lowered. With a slim 215-214 vote, the US House of Representatives passed President Donald Trump's 'One Big Beautiful Bill Act.'
The bill's most important feature was the addition of a 'tax on remittance' for foreigners who reside in the US.
According to the bill, legal immigrants in the US would pay taxes on their outgoing remittances, with some percentage of the money going to the US Treasury.
The recently proposed clause, known as the 'Excise tax on remittance transfers,' levies a 5% excise duty on remittance transfers. Some changes to it before the House passed it. According to an EY advice update, the US has lowered its proposed excise tax on external money transfers from 5% to 3.5%, after it raised concerns among Indians living and working in the nation. The modification is a component of Donald Trump's recently revealed One Big, Beautiful Bill Act, a comprehensive legislative package that targets financial, trade, and immigration flows.
The bill aims to support working families and place US economic interests.
The 3.5% remittance excise tax has the potential to have a big effect on India if it is implemented. The country gets about $25 billion in remittances from the US annually. In 2024, the World Bank reported that 28% of the $129 billion in foreign remittances that India received came from the US. The proposed levy, according to the Global Trade Research Initiative (GTRI), might result in a 10%–15% decrease in remittances to India, or a $12–18 billion yearly shortfall.
The following groups could be impacted if the bill is passed into law:
Holders of H-1B and F-1 visas
Holders of Green Cards
Non-residents who have assets or income in the US
Foreign people who shift money overseas after earning restricted stock units (RSUs) or other income from the US.
Also Read: After 25% tariff threat to Apple, Donald Trump targets Samsung: 'Phones not made in US'
Meanwhile, Indian tax experts warned of possible repercussions, stressing that families may experience an abrupt decline in the value of their remittances. Additionally, the proposal might deter foreigners from keeping assets or jobs in the United States. The burden of compliance may be greater for those employed in the US. There may be more enforcement pressure on financial institutions and money transfer providers.
Lloyd Pinto, a partner at Grant Thornton Bharat in the US tax division, "For Indians in the US — green card holders or those on H-1B or other visas — the tax will apply in addition to any income taxes already paid. In the short term, we expect a spike in remittances to India before January 1, 2026. We may also see some shift from formal to informal channels,' CNBC TV reported.
According to Manish Garg, Lead-Transfer-Pricing and Litigation at AKM Global, a tax and consultancy organisation, India could experience a decrease in foreign exchange inflow as NRIs may find it costly to send money back to India in the future.
Indians who are employed in the United States and even those who possess a green card will be significantly affected, he added, as per CNBC TV.
The new bill increases regulatory supervision as well. The requirement for money transfer companies to disclose users who send more than USD 5,000 in a single day has increased the scrutiny of regular transfers. Transfers for some clients may be delayed due to stricter KYC regulations and compliance filings.