In a relief that indians living abroad (NRI) have been waiting for, an important step has been taken. That is, the tax rate imposed on remittances to india from abroad has been reduced from 3.5% to just 1%. The US Senate has recently amended new rules. In it, money transfers are mainly excluded from accounts held in banks and other financial institutions in the US. In addition, transactions made using debit and credit cards issued in the US are also included in this control. This means that a large part of daily remittances is outside the scope of these new tax or control rules, experts say, and new barriers may arise in money transfers. The move is part of the US's effort to increase controls on financial movements and reduce money laundering and illegal transactions.
According to the US Senate proposal, the new tax rules on remittances have been determined to apply only to transfers made after december 31, 2025. With this, it is expected that individuals and companies sending money abroad will have to take precautions, as these tax rules will not be implemented for transfers until the end of 2025. The bill called the 'One Big beautiful Bill Act', passed in the US, has brought changes to the rules on sending money abroad. Initially, the bill was proposed to impose a 5% tax. However, in the final house version, this tax rate was reduced to 3.5%. This has left many non-resident indians (NRIs) living in the US worried. This is because they regularly remit money to india for family support, education, and investments. They are worried that the new tax rules will affect their remittance activities. According to a 2023 report by the Migration Policy Institute, over 2.9 million indians are the second largest foreign-born community in the US. Meanwhile, according to a report released by the reserve bank of india (RBI) for the fiscal year 2024, the US accounts for 27.7% of the total remittances to india from abroad. This is about US $ 32 billion. These figures also reveal the economic impact of indians living in the US and the size of their share in India.

Under the new bill, only non-citizens will be subject to remittance tax. This includes professionals, students, and green card holders in the US. Furthermore, this tax is likely to come into effect when student income from part-time jobs or internships is remitted to family in india after graduation. These new tax rules are likely to reduce the incentive to send remittances to India. Furthermore, real estate purchases and corporate mobility schemes may also be affected.
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Sowmiya Sriram

29/06/2025 10:23 AM