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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.
The Hindu
23-05-2025
- Business
- The Hindu
US govt moves to cut proposed tax on outward remittances to 3.5% from 5%
New Delhi The US government has decided to cut the tax it plans to levy on outward remittances sent to other countries — including India — from the earlier planned 5% to 3.5%. This change was implemented through an amendment to the One Big Beautiful Bill Act passed by the US House of Representatives on Thursday (May 23, 2025). The original version of the Bill, which contained sweeping changes to the US' income tax, healthcare, corporate tax, and national debt level regulations, had proposed a 5% excise tax on remittance transfers which would be paid by the sender. Now, the US House of Representatives, while passing the Bill, also approved a list of amendments to it. Among these was one relating to the rate of excise duty on remittances, saying 'strike '5 pe rcent' and insert '3.5 per cent''. The Bill will now have to be passed by the Republican-majority Senate in the US before it becomes law. The Hindu has learnt that the Indian government has not yet made any estimation of what impact such a tax would have on inward remittances. Reserve Bank of India data shows the US is the largest source of remittances to India, accounting for 27.7% or $32.9 billion of the remittances that flowed into the country in 2023-24. 'A tax on remittances would certainly dent the remittances coming into India,' a government official told The Hindu. 'But the government has not yet made an assessment of what that dent will be.' The official also added that India has also not yet taken a call on whether to approach the US for some relief in the matter or not. According to tax experts, the impact could be quite significant on Indians living in the US, and could push some of the remittances they send to India to the grey or even black market. In the short term, however, it may lead to a spike in such remittances. 'On outward remittance from US to India, for Indians who are green card holders or H1b/other visa holders living in the US, these groups will be subject to an extra 3.5% tax on remittances over and above the income taxes they may have paid,' Lloyd Pinto, Partner - US Tax at Grant Thornton Bharat explained. 'In the short term we expect remittances to India to spike before the effective date of Jan 1, 2026,' Mr. Pinto added. 'We may also see a shift of some remittances from formal to informal channels.'
