The US House of Representatives is understood to have passed the ‘One Big, Beautiful Bill Act’ — a sprawling tax and spending package that reflects President Donald Trump’s economic vision.The fine print of the bill, released overnight, proposes a 3.5% tax on remittances — down from the earlier 5%.
On May 13, 2025, the House Ways and Means Committee began deliberating on the bill. It aims to overhaul outdated tax policies and build on the 2017 tax cuts.
The goal: support working families and prioritise US economic interests.
If enacted, the 3.5% excise tax on remittances could significantly impact India. The country receives around $25 billion in remittances from the US every year.
Who could be affected?
If the proposal becomes law, it may hit several groups:
Visa holders (H-1B, F-1)
Green card holders
Non-residents with US income or assets
Foreign nationals receiving restricted stock units (RSUs) or other US-sourced income who send money abroad
Tax experts in India warn of potential consequences.Families could see a sudden drop in remittance value. The proposal may also discourage foreign workers from maintaining assets or employment in the USThose working in the US may face higher compliance burdens.Financial institutions and money transfer services could see increased enforcement pressure.Lloyd Pinto, Partner, US Tax at Grant Thornton Bharat, called it a significant development buried in the bill. “The amended version reduced the proposed excise tax on outward remittances from 5% to 3.5%,” he said.“No other changes have been made to this section. The new tax, if enacted, will apply to remittances from January 1, 2026, onwards — just at a lower rate.”He added: “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.”
Manish Garg, Lead- Transfer-Pricing and Litigation, AKM Global, a tax and consulting firm said, “India may experience lesser inflow of foreign currency as NRIs may find sending money back to India expensive going forward.Indians who are living in US on employment visa and Indians even who are green card holders will be largely impacted.”Rahul Jain, Partner at Khaitan & Co said, “The proposed Excise Tax on remittances outside of US applies to all the individuals, except for US citizens and nationals remitting funds through a qualified remittance transfer provider. Green Card Holders who are not US citizens will not be eligible for this exemption. Levy of excise tax is agnostic of the proceeds out of which the remittance is made and would also extend to remittance out of sale of stocks, securities, investments, and properties. If the individuals are eligible to claim a credit or refund of Excise Tax in US, this should be a temporary cash flow issue. From India standpoint, credit of foreign taxes is limited to Indian tax payable on the income earned overseas by an Indian resident. Once effective, the Excise Tax could impact individuals operating from US across all the sectors (including in IT industry, start-ups and pharmaceutical).”Sandeep Jhunjhunwala, International Tax Partner at Nangia Andersen LLP added, “The US House approval of the One Big, Beautiful Bill Act represents a notable shift in fiscal policy and has direct implications for the Indian diaspora. The decision to lower the proposed remittance tax from 5% to 3.5% offers significant relief to millions of Indian work force in the U.S. who routinely send money to family back home. Although the bill now heads to the Senate for further review and possible amendments, the move reflects the administration’s recognition of the economic contributions and growing electoral relevance of foreign work force. The remittance tax which is non-creditable tax is set to apply on international money transfers to a broad group of non-citizens, including green card holders, H-1B visa holders, and other foreign nationals residing in the US. In addition to personal remittances, the provision could also affect compensation practices. Many foreign nationals receive RSUs as part of their pay packages. When these RSUs vest and are sold, the sales proceeds are often transferred overseas to home country, for personal use, family support, or investment, or due to requirement under Exchange Control guidelines.”
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