- By Supratik Das
- Sat, 17 May 2025 02:42 PM (IST)
- Source:JND
In a decision that may drastically affect lakhs of Indians living in the United States, the US House of Representatives is weighing a new bill that suggests a 5 per cent tax on every foreign remittance sent by foreigners, including H-1B visa holders and green card holders. The bill, commonly known as 'The One Big Beautiful Bill', is expected to be passed in May 2025, with experts fearing that it will be enacted into law as early as June or July. The Indian diaspora, the largest remitting community in the world, stands to lose big. Indians in America remitted 32 billion USD in FY 2023-24, according to Reserve Bank of India numbers, which is close to 28 percent of India's total remittances of 118.7 billion USD. A 5 per cent tax on this would mean a 1.6 billion USD loss to the Indian community in America.
What The Bill Proposes
The proposed tax is hidden deep within the 389-page document released by the House Ways and Means Committee. On page 327, the bill outlines a remittance tax of 5 per cent applicable to all outbound transfers by individuals who are not US citizens or nationals. The tax would be deducted upon transfer by banks or remittance providers. Most importantly, there is no threshold limit, so even low-value transfers to relatives or investments in India by yourself would be taxed.
Who Will Be Affected
The bill will cover:
• H-1B and L-1 visa holders
• Green card holders
• Any non-citizen remitting money overseas
Those who are not labeled as 'verified US senders', a designation reserved for US citizens and nationals, will be subject to taxation. These include remittances for the support of the family, purchase of property, educational fees, and other uses.
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What Can Indian Diaspora Do Now?
International experts are urging Indian nationals resident in the US to remit more funds prior to the enactment of the law, potentially saving thousands of dollars. There is no escaping the 5% levy once this bill is enacted.
The United States is now the largest source of remittances to India, owing to a combination of high income levels and a sizeable Indian population. The Ministry of External Affairs estimates that nearly 45 lakh Indians reside in the US, including around 32 lakh Persons of Indian Origin (PIOs). If approved, the US remittance tax bill would be a seismic change in the direction of money flow from the US to India, both in terms of personal and economic relationships between the two nations.
