Trump’s ‘One Big Beautiful Bill’: How the remittance tax plan will hurt Indians sending money home

US President Donald Trump

A new legislative proposal in the United States, known as the "One Big Beautiful Bill," is causing concern among Indian residents and non-resident Indians (NRIs) living in America. The bill central to US President Donald Trump's domestic agenda cleared a key hurdle Sunday, progressing out of the House Budget Committee after several lawmakers holding up the legislation dropped their opposition.

The bill includes a provision to impose a 5% tax on all international money transfers made by non-US citizens, including those on non-immigrant visas like H-1B and green card holders. If enacted, this tax would be withheld at the point of transfer, with no exemption threshold, meaning even small remittances would be subject to the tax.

The 1,116-page legislation includes a section on remittances which clarifies that the proposed 5 percent levy will not apply to transfers made by a 'verified US sender'; that is, individuals who are U.S. citizens or nationals.

Financial impact on Indian diaspora

This new law is expected to cause a severe financial blow to nearly 45 lakh Indians living in the US, including nearly 32 lakh of Indian origin.

Estimates suggest that Indians in the US remit approximately $32 billion annually to India. A 5% tax on these remittances could result in an additional $1.6 billion in taxes paid by the Indian community each year.

For individual senders, this means that for every $1,000 sent to India, an additional $50 would be paid in taxes. Over time, these costs could add up significantly, affecting the financial well-being of many families who rely on remittances for their daily expenses, education, and healthcare.

Broader economic Impact

India is the world's largest recipient of remittances, with a significant portion coming from the United States. In 2023, India received approximately $125 billion in remittances, with nearly 28% originating from the US

The proposed tax could lead to a decrease in remittance flows, potentially causing a $12-18 billion annual shortfall. This reduction could weaken the Indian rupee and impact households that depend on these funds, particularly in states that are heavily reliant on remittance income.