Former U.S. President Donald Trump has introduced the ‘One Big Beautiful Bill’, a sweeping fiscal proposal that includes a 5% tax on remittances sent by non-U.S. citizens, a move that could significantly impact India’s economy.
Impact on Indian Remittances
India is the largest recipient of U.S. remittances, with $32 billion sent from the U.S. in FY 2023–24. If enacted, the bill could result in a $1.65 billion annual loss for India.
Key Provisions of the Bill
- 5% Tax on Outward Remittances – The tax applies to non-citizens, including H-1B and L-1 visa holders, who send money abroad.
- No Minimum Exemption Limit – Even small-value transfers will be taxed, affecting daily expenses and investments.
- Tax Collection by Banks – U.S. banks and remittance providers will withhold the tax at the point of transfer.
- Refundable Tax Credit for U.S. Citizens – Only verified U.S. senders can claim a full refund on remittance taxes.
Concerns from Indian Diaspora
The bill has sparked concerns among Indian professionals in the U.S., particularly those on temporary work visas, who regularly send money to their families in India. Experts warn that the tax could reduce remittance flows, affecting India’s foreign exchange reserves and economic stability.
Conclusion
While Trump’s bill aims to boost U.S. revenue, its impact on Indian workers and remittances remains a major concern. The proposal is expected to face debate in Congress, with Indian policymakers closely monitoring developments.
