US Remittance Tax Relief Likely! NRIs Cheer as Senate Draft Slashes Levy to 1%
Non-Resident Indians (NRIs) in the United States have a big reason to rejoice. The final draft of the US Senate’s version of the ‘One Big Beautiful Bill Act’ proposes reducing the remittance tax to just 1%, down from the previously revised rate of 3.5%, offering much-needed relief to millions of Indian expatriates.
Initially, the bill had suggested a steep 5% levy on outbound remittances, raising concern among the Indian diaspora. The House version later brought it down to 3.5%. Now, the Senate’s latest draft lowers it further—signalling a softer stance on personal money transfers to foreign countries.
Relief for Routine Transfers
According to an ET report, the tax will only apply to physical remittance instruments such as cash, money orders, or cashier’s checks. Transfers made via bank accounts, debit cards, credit cards, or financial institutions are exempt—offering clarity and comfort to those who use formal banking channels. The tax is proposed to come into effect for qualifying transfers after December 31, 2025.
India: Top Beneficiary of US Remittances
The United States remains the largest source of remittances to India. According to RBI’s March 2024 survey, the US contributed around $32 billion, accounting for 28% of India’s total $118.7 billion in remittance inflows for 2023–24. These funds are crucial to many Indian households, especially in rural areas.
The migration trend shows more qualified professionals moving to advanced economies, with the US share rising from 23.4% in FY21 to 27.7% in FY24. The UK has also seen an uptick in remittance share, attributed to the 2021 ‘Migration and Mobility Partnership’ with India.
Who Will Be Affected?
The new tax regulation, if enacted, will directly impact Indian professionals on H-1B and L-1 visas, green card holders, and other US-based residents who send money home. However, with routine digital transfers largely exempt, the real burden appears limited to cash-based remittances.
