Trump’s New Bill Proposes 5% Tax on Foreign Remittances: India Faces Potential $1.65 Billion Hit

News Flash

16 May

‘One Big Beautiful Bill’ May Affect Millions of Indian NRIs in the US; Experts Warn of Major Drop in Remittances

New Delhi: In a move that could deeply impact India’s economy, former US President Donald Trump’s proposed ‘One Big Beautiful Bill’ seeks to impose a 5% tax on all foreign remittances made by non-citizens, including H-1B visa holders and non-immigrant workers.

India, being the largest recipient of foreign remittances from the US, could suffer a $1.65 billion shortfall if this bill becomes law, warn tax experts.

“The bill targets remittances by non-citizens, including Indian professionals. If passed, it could reduce India’s annual inward remittance from the US by a significant margin.”
— Saurav Sood, International Tax Expert, SW India

India Tops the US Remittance List

According to Reserve Bank of India (RBI) data, the US accounted for 27.7% of all remittances to India in FY 2023–24, up from 23.4% in 2020–21, making it the top remittance source for the country.

India received $118.7 billion in remittances in 2023–24 — $33 billion of which came from the US alone. With a 5% levy, $1.65 billion could be lost in tax to the US government.

Who Will Be Impacted?

• Non-citizens in the US: including non-immigrant visa holders like H-1B, L1, and F1

• NRIs who are not US citizens

• Those sending personal remittances to India

According to Statista, 5.4 million Indians live in the US, with 3.3 million under the PIO (Persons of Indian Origin) category.

A majority (78%) of Indian immigrants are employed in high-income sectors like IT, management, and scientific research — and are frequent remitters to India.

Expert Insight: Not Just a Financial Tax

Tax professionals argue this proposed tax is not just an economic issue but could negatively impact Indian families dependent on overseas income, as well as charitable remittances and investments in India.

“This could influence relocation decisions and investment behavior of Indian-origin professionals. India’s foreign currency inflow could also suffer,”
— Saurav Sood, SW India