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US slashes remittance tax for NRIs from 3.5% to 1%
29 Jun 2025

In a major relief for Non-Resident Indians (NRIs), the US Senate has revised its "One Big Beautiful Bill Act" and slashed the proposed remittance transfer tax from 3.5% to just 1%.

The move comes as a big relief for the Indian diaspora in America, who were worried about their financial transactions back home.

The new version of the bill exempts transfers from accounts held at banks and other financial institutions, and those made through debit/credit cards issued in the US.

Tax applicable on cash transfers made after December 31, 2025
Tax details

The remittance transfer tax, according to the Senate proposal, will only be applicable to cash transfers made after December 31, 2025.

This means that a large part of daily remittances could escape the new tax's ambit.

The move is likely to ease concerns among NRIs who regularly send money home for family support or investments in India.

Concerns among NRIs over original bill's impact on remittances
Diaspora concerns

The 'One Big Beautiful Bill Act' raised alarm bells among the Indian diaspora in America over its possible effect on outbound remittances.

The original bill proposed a 5% tax, but the final House version cut it down to 3.5%.

This change has worried many NRIs who regularly send money home for family support or investments in India.

Non-citizens liable for remittance excise tax
Remittance statistics

Indians form the second-largest foreign-born population in the US, with over 2.9 million residents as of 2023, according to the Migration Policy Institute.

In FY24, America contributed nearly 28% of India's total inward remittances, almost $32 billion, according to the Reserve Bank of India (RBI) data.

The bill proposes that only non-citizens, such as highly skilled professionals, students, and green card holders, will be liable for this remittance excise tax.