Although many indians reside in the united states and send a significant portion of their income to india, a decision made by the donald trump administration may have an impact on Indians' incomes.
There is now no remittance tax, or tax imposed, on money remitted from the united states to India. The full amount of money arrives here and the sender is exempt from paying any additional taxes if an indian transfers a portion of his earnings to his family from there. However, the trump administration has finally made the decision to impose taxes.
In this regard, the 'One Big beautiful Bill' was just passed by the US house of Representatives and contains a clause imposing a 3.5% excise tax on funds transported outside by non-US individuals. This plan was first presented as a 5% tax. For indian expats (NRIs) and other immigrants who frequently send money to their families in india, it has become an issue. If this bill is passed into law, it will take effect on january 1, 2026, which could have an impact on payments to nations like India. It hasn't been approved by the Senate yet, though.
What will be the impact on India?
The united states accounts for 28% (about $33 billion) of the $129 billion in remittances that india receives year, according to World bank figures for 2024. Families' financial situation and India's foreign exchange reserves both depend on this sum. According to the Global Trade Research Initiative (GTRI), the proposed tax might cause remittances to india to drop by 10% to 15%, costing the country $12–18 billion a year.
An nri must pay Rs 2900 (about $35) in taxes if he sends Rs 83,000 (roughly $1,000) to India. A $350 extra fee will be applied to bigger transfers, such as transferring $10,000 for schooling or a property purchase.
Impact on NRIs and Visa Holders
Non-US nationals who hold green cards, H-1B, L-1, or F-1 visas will be subject to this tax. The amount transferred, not the income, will determine this tax, which is distinct from income tax. This implies that NRIs will be required to pay an extra 3.5% tax on the money they send to their relatives after already paid income tax.
Impact on India's Economy
India is the biggest beneficiary of remittances in the world, and the $33 billion that the US sends is essential to small businesses, family incomes, and the country's economy.
Families may get less money, which might have an impact on their everyday expenses for things like rent, healthcare, and education. industries that rely on nri investment, including the stock market and real estate, could also be impacted. A decline in remittances might strain foreign exchange reserves, raising the risk of currency depreciation, according to data from the Reserve bank of India.
There is now no remittance tax, or tax imposed, on money remitted from the united states to India. The full amount of money arrives here and the sender is exempt from paying any additional taxes if an indian transfers a portion of his earnings to his family from there. However, the trump administration has finally made the decision to impose taxes.
In this regard, the 'One Big beautiful Bill' was just passed by the US house of Representatives and contains a clause imposing a 3.5% excise tax on funds transported outside by non-US individuals. This plan was first presented as a 5% tax. For indian expats (NRIs) and other immigrants who frequently send money to their families in india, it has become an issue. If this bill is passed into law, it will take effect on january 1, 2026, which could have an impact on payments to nations like India. It hasn't been approved by the Senate yet, though.
What will be the impact on India?
The united states accounts for 28% (about $33 billion) of the $129 billion in remittances that india receives year, according to World bank figures for 2024. Families' financial situation and India's foreign exchange reserves both depend on this sum. According to the Global Trade Research Initiative (GTRI), the proposed tax might cause remittances to india to drop by 10% to 15%, costing the country $12–18 billion a year.
An nri must pay Rs 2900 (about $35) in taxes if he sends Rs 83,000 (roughly $1,000) to India. A $350 extra fee will be applied to bigger transfers, such as transferring $10,000 for schooling or a property purchase.
Impact on NRIs and Visa Holders
Non-US nationals who hold green cards, H-1B, L-1, or F-1 visas will be subject to this tax. The amount transferred, not the income, will determine this tax, which is distinct from income tax. This implies that NRIs will be required to pay an extra 3.5% tax on the money they send to their relatives after already paid income tax.
Impact on India's Economy
India is the biggest beneficiary of remittances in the world, and the $33 billion that the US sends is essential to small businesses, family incomes, and the country's economy.
Families may get less money, which might have an impact on their everyday expenses for things like rent, healthcare, and education. industries that rely on nri investment, including the stock market and real estate, could also be impacted. A decline in remittances might strain foreign exchange reserves, raising the risk of currency depreciation, according to data from the Reserve bank of India.
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