Indians to benefit as Trump's Big Beautiful Bill reduces remittance tax to 1%

In a big relief to Indian professionals working in the US and non-resident Indians (NRIs) sending money to India, the updated draft of the One Big Beautiful Bill Act (OBBBA) has reduced the tax rate on remittances to 1%, down from the 5% proposed originally.

The tax will apply to remittances made via cash, money orders, or cashier's checks.

Proposed at 5% in May, the tax rate was brought down to 3.5% in the House version of the bill.

The revised One Big Beautiful Bill states: "There is hereby imposed on any remittance transfer a tax equal to 1% of the amount of such transfer."

"The tax imposed by this section with respect to any remittance transfer shall be paid by the sender with respect to such transfer," the updated draft also says.

The Bill also exempts remittances made from "an account held in or by a financial institution" and those "funded with a debit card or a credit card issued in the United States".

The earlier version of the bill, passed by the House of Representatives in May this year, had many Indian professionals concerned, as it had proposed a 5% tax on remittances sent from the US to foreign countries.

The proposal is relevant for non-US citizens, including Green Card holders and workers on temporary visas such as H-1B or H-2A.

WHY THE TAX ON REMITTANCES MATTERS TO INDIANS

Remittances form a substantial part of India's foreign income.

According to The Times of India, citing data from the Migration Policy Institute, the US hosted approximately 2.9 million Indians as of 2023, making them the second-largest foreign-born population in the country.

Also, according to 2024 World Bank data, India was the top recipient of international remittances, receiving $129 billion, followed by Mexico with over $68 billion. In 2023-24, 28% of all remittances to India originated in the US.

India also accounted for 14.3% of global remittances during this period, the highest share by any country since the turn of the millennium.

In states like Kerala, Uttar Pradesh, and Bihar, remittances remain a financial lifeline for millions of households.

CURRENT STATUS OF TRUMP'S ONE BIG BEAUTIFUL BILL

The US President’s flagship bill passed a key Senate hurdle on Saturday (US time) with a narrow 51-49 vote and is now set to be discussed in the Senate. According to Al Jazeera, Trump wants Congress to pass the bill before July 4.

The legislation includes a $150 billion boost in military spending, mass deportation measures, and border wall funding. To finance these, it proposes deep cuts to federal programmes, including Medicaid and clean energy incentives.

This has triggered outrage across party lines, including within Republican ranks.

The bill also triggered a public rift between Donald Trump and Elon Musk, with the Tesla CEO denouncing it as "utterly insane" and warning it would destroy millions of American jobs.

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