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Business Standard
27 minutes ago
- Business Standard
US to levy 1% remittance tax: What it means for NRIs and students
The US Senate on Tuesday passed President Donald Trump's 'One Big Beautiful Bill Act', bringing with it a new tax on overseas money transfers by non-citizens. The legislation, which takes effect on July 4, 2025, introduces a 1 per cent levy on remittances made through cash, money orders, or cashier's cheques. The rule will apply to anyone who isn't a US citizen—including Green Card holders, people on temporary visas such as H-1B or H-2A and foreign students. 'For example, if you send $1,160—or around ₹100,000—to your parents in India, you may have to pay ₹1,000 more in tax,' said Rajarshi Dasgupta, executive director – tax. 'That money will be collected by the remittance provider—be it Western Union, MoneyGram or a bank—and passed on to the US government every quarter,' he told Business Standard. In a relief for Indians, the tax rate was originally set at 5 per cent, but was reduced to 1 per cent in the final version of the Bill. Why it matters to India? Remittances play a key role in India's foreign income. According to the World Bank, India received $129 Billion in international remittances in 2024—the highest in the world. Mexico was second with just over $68 Billion. Nearly 28 per cent of India's remittance inflows in 2023-24 came from the United States alone. Several Indian states, including Kerala, Uttar Pradesh, and Bihar, rely heavily on these funds for household income. But there's been a recent shift in the pattern, particularly when it comes to money sent by students abroad. Remittances from students on the decline Funds sent by resident Indians under the Reserve Bank of India's Liberalised Remittance Scheme (LRS) fell 6.84 per cent to $29.56 Billion in 2024-25, down from $31.74 Billion the previous year. The steepest drop was seen in money remitted for education abroad. According to the RBI, these remittances fell 16 per cent—from $3.48 Billion to $2.92 Billion. 'Tighter work authorisation policies and recent visa rule changes in the United States have significantly disrupted traditional patterns of student mobility, with a direct impact on remittance flows,' Prof Venkataramanan, pro vice-chancellor at FLAME University told Business Standard. He added, 'Canada's move to cap study permits and require provincial attestation letters, alongside stricter financial documentation, has raised the entry threshold for students. The United States has paused visa interviews and announced aggressive visa revocations targeting certain nationalities. These factors are making families rethink the scale of investment in foreign education.' Families are more cautious about education loans and remittances Prashant A Bhonsle, founder and CEO of Kuhoo Finance, said the uncertainty around post-study work options is a growing concern for parents. 'Students and parents are questioning the return on investment when career security abroad becomes uncertain,' he told Business Standard. Visa processing delays are adding another layer of difficulty. 'For students still in India, delayed visa approvals mean postponed tuition and living expense payments. For those already abroad, uncertainty about their future makes them hesitant to send money back home,' Bhonsle explained. According to Pavan Kavad, managing director at Prithvi Exchange, recent visa policy changes in the UK and Australia are also linked to the remittance dip. 'Developed economies are facing employment challenges amid recession fears. Families are waiting for more clarity before transferring large sums abroad,' he said. Indian institutions and banks adjust to the shift Venkataramanan pointed out that some Indian banks and financial institutions are already adapting. 'Public and private banks are seeing more staggered disbursals of education loans instead of upfront payments. Families are aligning payments with semester confirmations, often waiting for visa approvals before committing,' he said. NBFCs and fintech firms, he added, are also reporting a drop in high-value remittances. Meanwhile, Bhonsle noted that tighter financial documentation rules abroad have made it harder for families to demonstrate the funds required for visa approvals. 'This has created larger upfront commitments that not all families can meet easily,' he said. Trust in the visa system is faltering Beyond the rules themselves, trust appears to be the larger issue. 'In the US, social media scrutiny, visa delays, and the new remittance tax all contribute to the sense that studying abroad is more financially risky,' Kavad said. That perception is prompting Indian families to either delay their plans or look at domestic alternatives. 'The slowdown has led financial institutions to take a more cautious and adaptive approach,' said Venkataramanan. 'We may be in a transitional phase rather than a terminal decline. If visa clarity improves and financial processes become more predictable, the flows could recover. Until then, families will continue to explore more stable options.'
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First Post
30 minutes ago
- First Post
How is the India-US trade deal shaping up?
Though US President Donald Trump has expressed optimism that a bilateral trade deal (BTA) with India can be concluded soon, the two sides are said to be apart on key issues including dairy and agriculture. This comes as Trump's July 9 deadline, following which reciprocal tariffs will be reimposed, draws nearer and nearer. But what did Trump say? How is the India-US trade deal shaping up? read more President Donald Trump shakes hands with Prime Minister Narendra Modi in the Oval Office of the White House. AP US President Donald Trump has expressed optimism about a possible bilateral trade deal (BTA) with India. Though there are reports that the trade deal might be finalised this week, the two sides are said to be apart on key issues including agriculture. Trump, who had initially imposed reciprocal tariffs on dozens of countries including a 26 per cent levy on India on April 2, had issued a 90day-pause in order to allow countries to negotiate. STORY CONTINUES BELOW THIS AD But with the July 9 deadline is drawing nearer and nearer, India and the US have still not reached a deal. But what did Trump say? How is the India-US trade deal shipping up? Let's take a closer look: What Trump said First let's take a brief look at what Trump said. Trump said he thinks the United States and India would reach a bilateral trade agreement. 'I think we are going to have a deal with India. And that is going to be a different kind of a deal. It is going to be a deal where we are able to go in and compete. Right now, India does not accept anybody in. I think India is going to do that, and if they do that, we are going to have a deal for much less tariffs,' Trump said. President Donald Trump said a deal could be imminent. AP Trump's remarks came after US Treasury Secretary Scott Bessent on Tuesday said that India and the US were 'very close' on a deal. External Affairs Minister S Jaishankar on Monday had expressed optimism about a deal being concluded. 'We are in the middle — hopefully more than the middle — of a very intricate trade negotiation,' Jaishankar said. 'Obviously, my hope would be that we bring it to a successful conclusion. I cannot guarantee it, because there's another party to that discussion.' Trump in June said the deal with India was imminent. STORY CONTINUES BELOW THIS AD 'We have one coming up, maybe with India. A very big one. Where we're going to open up India,' Trump said. 'We're not going to make deals with everybody. Some, we are just going to send them a letter, say thank you very much… My people don't want to do it that way. They want to do some of it, but they want to make more deals than I would do', he added. Now, let's take a look at what we know about the negotiations. How are negotiations going? The Indian delegation led by chief negotiator Rajesh Aggarwal had landed in the United States on Friday. The team, which is negotiating with US officials including those from the Office of the United States Trade Representative (USTR), has now extended its stay in Washington. Both teams, mindful of the upcoming deadline set by Trump, were said to be in fierce negotiations over the BTA. However, key sticking points remain. New Delhi is said to be adamant about carving out protections for its dairy and agriculture industry. This is out of consideration for the millions of farmers working on small landholdings across the country. This can also be both a politically and economically sensitive issue to navigate. STORY CONTINUES BELOW THIS AD India is said to be adamant about protecting its farmers. PTI India, for those not in the know, has never opened up its dairy sector to a foreign competitor. India is the biggest producer of milk in the world. Experts also say any reduction in tariffs on dairy and agriculture could undermine India's Minimum Support Price (MSP) system – which could be devastating to farmers. However, the US negotiators seem insistent about opening up a new market for its agricultural products including genetically modified crops, apples, reducing tariffs on skimmed milk powder and poultry products. India has been reluctant to allow genetically modified crops to be sold out of health concerns. India has banned the commercial cultivation of genetically modified crops. Washington, which is looking to bring down its $54 billion trade deficit with New Delhi, wants to export maize, soya bean, cotton and corn to India. India has told negotiators reducing tariffs on skimmed milk powder and poultry would hurt its small farmers. Indian officials have described the dairy sector as a 'red line' that cannot be crossed. STORY CONTINUES BELOW THIS AD They earlier insisted that India's national interest will come first in any deal. The US also wants large-scale commitments from India to buy Boeing aircraft, choppers and nuclear reactors. Washington may also pursue trying to get India to relax its FDI rules – which would benefit US behemoths such as Amazon and Walmart. Officials say that India can likely bring down tariffs for ethanol, almonds, apples, raisins, avocados, olive oil, spirits and wines. New Delhi, on the other hand, wants the United States to reduce levies on auto imports and Indian steel. India also wants preferential access for its labour-intensive exports, such as textiles and garments, gems and jewellery, leather goods, and agricultural products like shrimp, oilseeds, grapes, and bananas. The US wants India to open up its agriculture, dairy, aviation and energy sectors, while New Delhi is looking for Washington to cut tariffs on steel and auto parts Officials say that these will not likely hurt those selling these products domestically in the US. Though the government think tank Niti Aayog had in a working paper in May suggested that India can relax tariffs on 'soybean oil imports', that paper has now been taken offline – which raises many questions. STORY CONTINUES BELOW THIS AD India remains the world's biggest importer of edible oil. Officials say that reducing tariffs on maize and soybeans would hurt Indian small farmers. Similarly, bringing down tariffs on maize would result in the production becoming unfeasible for local farmers. If talks don't pan out, India will likely face a 10 per cent across the board levy rather than the 26 per cent tariff Trump imposed. But experts say a 'limited trade pact', like the one the US and UK announced on May 8, is likely. Prime Minister Narendra Modi and Trump in February had agreed to increase bilateral trade, which was at $262 billion in 2024, to $500 billion by 2030. With inputs from agencies
Indian Express
32 minutes ago
- Indian Express
Hamas says ‘ready' for a ceasefire but it must put an end to war in Gaza
Hamas on Wednesday signalled openness to a ceasefire agreement with Israel but stopped short of accepting a US-backed proposal unveiled by President Donald Trump just hours earlier. The group reiterated its long-standing demand that any deal must bring a complete end to the war in Gaza. Trump said Tuesday that Israel had agreed to a 60-day ceasefire and urged Hamas to accept the terms before the situation worsens. The US president has stepped up pressure on both Israel and Hamas to secure a ceasefire, facilitate hostage releases, and move toward ending the war. 'The 60-day period would be used to work toward ending the war,' Trump said, though Israel has maintained that the conflict won't end until Hamas is defeated. Trump suggested a deal might materialise as early as next week. Hamas official Taher al-Nunu said the group is 'ready and serious regarding reaching an agreement' and is open to 'any initiative that clearly leads to the complete end to the war,' a report by AP reported. A Hamas delegation is expected in Cairo on Wednesday for talks with Egyptian and Qatari mediators, according to an Egyptian official who spoke anonymously, the report added. A major stumbling block throughout the 21-month war has been the opposing views on how the conflict should end. Hamas says it is willing to release the remaining 50 hostages, fewer than half of whom are believed to be alive, in exchange for a complete Israeli withdrawal and a formal end to hostilities. Israel, however, insists that the war will only end with Hamas' surrender, disarmament, and exile, terms Hamas continues to reject. It remains unclear how many hostages would be freed under this proposal, though earlier plans suggested the release of around 10 individuals. Israel has not yet publicly responded to Trump's announcement. Prime Minister Benjamin Netanyahu is scheduled to visit the White House on Monday for talks, following a recent meeting between senior adviser Ron Dermer and top US officials. On Tuesday, Trump posted on social media that Israel had 'agreed to the necessary conditions to finalize the 60 Day CEASEFIRE,' adding: 'I hope, for the good of the Middle East, that Hamas takes this Deal, because it will not get better — IT WILL ONLY GET WORSE.' Even before the last ceasefire expired in March, the US president had issued multiple ultimatums, urging Hamas to accept extended pauses in the conflict in exchange for aid and hostage releases. More than 56,000 people have died in the Palestinian territory, according to Gaza's Health Ministry, which reports that over half of the dead are women and children. The ministry does not distinguish between combatants and civilians. The war began on October 7, 2023, when Hamas-led militants launched a surprise attack on southern Israel, killing 1,200 people and taking approximately 250 hostages. Since then, much of Gaza has been reduced to rubble. Over 90% of the territory's 2.3 million people have been displaced, many multiple times, and the region is facing an escalating humanitarian crisis.
