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Business Standard
15 hours ago
- Business
- Business Standard
US Senate lowers proposed remittance tax to 1%, spares bank transfers
The US Senate has softened its proposed remittance tax, cutting the rate to 1 per cent and sparing most bank account and card transfers — a move that will come as major relief for millions of Non-Resident Indians (NRIs) and other immigrant communities who regularly send money home. The tax would start applying to remittance transfers made after December 31, 2025 as per the proposal. A new draft of the "One Big Beautiful Bill", released on June 27, shows big changes from the earlier version passed by the House of Representatives. The tax was originally proposed at 5 per cent in the House bill under the Trump administration before being reduced to 3.5 per cent and now further lowered to 1 per cent in the Senate draft. But crucially, this tax will only apply to cash or similar physical payments handed over to money transfer providers. Transfers done through bank accounts or debit and credit cards issued in the US won't be taxed. The bill says the tax is 'limited to cash and similar instruments… only to any remittance transfer for which the sender provides cash, a money order, a cashier's check, or any other similar physical instrument.' And it specifically states the tax will not apply when money comes from 'an account held in or by a financial institution' that meets US regulatory standards, or when funded with 'a debit card or a credit card which is issued in the United States'. Lloyd Pinto, Partner – US Tax, Grant Thornton Bharat, said, 'Senate republicans released their updated draft of the proposed One Big Beautiful Bill Act on Jun 27 and have a self imposed deadline of July 4 to try to pass this bill.... This should come as a huge relief to the NRI community in the US as they will not be subject to this remittance tax if the remittances are made through accounts held with designated US bank and financial institutions or funded via debit or credit cards issued in the US.' India is the largest recipient of remittances from the United States. In 2023-24, India received $32.9 billion from the US alone, accounting for 27.7 per cent of its total inward remittances, according to Reserve Bank of India data. Overall, India's remittances have more than doubled over the past decade, growing from $55.6 billion in 2010-11 to $118.7 billion in 2023-24. Earlier, concerns were raised by immigrant communities and policy experts over the House proposals, as the higher tax rates threatened to increase costs for millions of families depending on cross-border money transfers.
Hans India
19 hours ago
- Business
- Hans India
US Senate reduces remittance tax to 1 pc from 3.5 pc in relief for NRIs
Washington: The US Senate has proposed to reduce remittance transfer tax from 3.5 per cent to just 1 per cent, offering considerable relief to non-resident Indians (NRIs). The revised draft of US President Donald Trump's "One Big Beautiful Bill Act" excludes transfers from accounts held at banks and other financial institutions, and also excludes transfers made via debit and credit cards issued in the United States. It means that a large portion of day-to-day remittances may fall outside the scope of the new tax. Originally, the bill sought a 5 per cent tax but the final House version lowered it to 3.5 per cent. According to Lloyd Pinto, Partner-US Tax, Grant Thornton Bharat, Senate republicans released their updated draft of the proposed 'One Big Beautiful Bill Act' and have a self-imposed deadline of July 4 to try to pass this bill. 'The updated Senate version significantly changes the remittance transfer provisions that was passed by the House Republicans. In the latest Senate draft, the remittance transfer tax has been reduced to 1 per cent from the erstwhile proposal of 3.5 per cent,' he said. Notably, the Senate proposal excludes transfers from accounts held at banks and other financial institution and also excludes transfers made via debit and credit cards issued in the United States. The remittance transfer tax will apply only to any remittance transfer for which the sender provides cash, a money order, a cashier's check, or other similar physical instrument to the remittance transfer provider. This tax will apply to transfers made after December 31, 2025. 'This should come as a huge relief to the NRI community in the US as they will not be subject to this remittance tax if the remittances are made through accounts held with designated US bank and financial institutions or funded via debit or credit cards issued in the US,' Pinto noted.
The Hindu
19 hours ago
- Business
- The Hindu
New draft of U.S. law cuts remittance tax to 1%, exempts bank and card transfers
U.S. legislators have significantly diluted the provision in the proposed legislation to tax remittances to other countries, including to India. The latest version of the Bill, released on Friday (June 27, 2025), reduces the tax on remittances to 1% from the earlier proposal of 3.5%, and excludes remittances made from bank accounts and other financial institutions and those made via debit or credit cards from the tax. The 1% tax will now apply only on remittances made in cash, a money order, or a cashier's check. According to international tax experts, this will come as a significant relief to the non-resident Indian (NRI) community in the U.S. The 'One Big Beautiful Bill Act' was passed by the U.S. House of Representatives in May 2025. It is now up for debate in the U.S. Senate, following which it will be voted upon. 'There is hereby imposed on any remittance transfer a tax equal to 1 percent of the amount of such transfer,' the latest version of the Act says. 'The tax imposed by this section with respect to any remittance transfer shall be paid by the sender with respect to such transfer.' However, the latest draft also inserts additional paragraphs to the section on the tax on remittances. 'The tax imposed under subsection (a) shall apply only to any remittance transfer for which the sender provides cash, a money order, a cashier's check, or any other similar physical instrument (as determined by the Secretary) to the remittance transfer provider,' the draft Bill said. In addition, the Bill now says that remittances made from 'an account held in or by a financial institution' and 'funded with a debit card or a credit card which is issued in the United States' are exempt from the tax. 'Senate Republicans released their updated draft of the proposed One Big Beautiful Bill Act on June 27 and have a self imposed deadline of July 4 to try to pass this bill,' Lloyd Pinto, Partner - U.S. Tax at Grant Thornton Bharat said. 'The updated Senate version significantly changes the remittance transfer provisions that were passed by the House Republicans. In the latest Senate draft, the remittance transfer tax has been reduced to 1% from the erstwhile proposal of 3.5%.' The 3.5% tax proposal itself was a reduction brought into the Act in May from the original proposal of 5%. 'This (the latest relaxations) should come as a huge relief to the NRI community in the US as they will not be subject to this remittance tax if the remittances are made through accounts held with designated US banks and financial institutions or funded via debit or credit cards issued in the U.S.'
Hindustan Times
24-05-2025
- Business
- Hindustan Times
Big, Beautiful rollback: US lowers remittance tax to 3.5%, easing NRIs and H-1B workers burden, how it will impact India
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.
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Business Standard
23-05-2025
- Business
- Business Standard
US Bill lowers remittance tax from 5% to 3.5% for non-US citizens
The Donald Trump administration has lowered the proposed remittance tax rate it plans to impose on funds sent abroad by non-US citizens, including to India, from 5 per cent to 3.5 per cent. The change was introduced through an amendment to the 'One Big Beautiful Bill', which was passed by the US House of Representatives on Thursday. Non-US citizens include H-1B, L-1, and F-1 visa holders, as well as green card holders. US citizens and nationals are exempt from this tax. The Bill will now head to the Republican-majority Senate for final approval before it can be enacted into law. The original version of the Bill — spanning major reforms in income tax, health care, corporate taxation, and federal debt — included a 5 per cent excise duty on outward remittances, to be paid by the sender. It drew concern from immigrant communities and experts, especially given the volume of remittances flowing from the US to countries like India and Mexico. A government official speaking on condition of anonymity said the Bill if enacted, will have an impact on remittances into the country. 'The government has not made an assessment yet. No discussion has happened whether its removal can be a demand under the proposed India-US bilateral trade agreement,' the official said. India is the largest recipient of remittances from the US. It received $32.9 billion in 2023-24, with a 27.7 per cent share in the country's inward remittances, according to the Reserve Bank of India data. Overall, such remittances have more than doubled from $55.6 billion in 2010-11 to $118.7 billion in 2023-24. 'In the short term, we expect remittances to India to spike before the effective date of January 1, 2026. We may also see a shift of some remittances from formal to informal channels,' said Lloyd Pinto, Partner - US Tax at Grant Thornton Bharat.
