5% Remittance Tax: Know all about this new Tax introduced in US Bill:

5% Remittance Tax: Know all about this new Tax introduced in US Bill There is a new bill in the US House of Representatives that seeks to levy a 5% tax on remittances sent abroad by non-US citizens, including H-1B visa workers and green card holders. This may significantly impact a number of Indians working and living in the US who send remittances to their families in India from time to time.

What the Bill Intends

The bill, also referred to as The One Big Beautiful Bill, has a provision where it would impose a 5% tax from any foreign money transfer done by foreigners. The tax will be imposed when the transaction is made by either the money transmitting services or banks. There is no threshold so even small transfers will be taxed unless the sender is a verified US citizen or national.

Impact on the Indian Community

India has the highest remittances from the US. Indian-origin individuals in the US sent $32 billion in 2023-24, as per a Reserve Bank of India survey released in March 2024. The number of Indians and Persons of Indian Origin in the US stands at around 4.5 million and 3.2 million respectively, as per the Indian Ministry of External Affairs. If remittances remain at the current level, the 5% tax will come to approximately $1.6 billion annually for the Indian diaspora.

What You Can Do

Financial experts advise sending money abroad in advance of when the bill can become a law, possibly even as early as June or July. Sending money now could block the imposition of the increased rate of taxation.