Remittances Tax: 5% remittance tax will be levied on NRIs living in the US, this will be the loss
It will now become costly for Indian citizens living in America to send money to their families in India, as they will now have to pay tax on it. In fact, the US Republican House has proposed a bill to impose a 5% tax on the money sent abroad by non-citizens.
US Remittances Tax on NRIs: While US President Donald Trump has given sleepless nights to the whole world including India with his tariff policy, India is going to get a shock from another new order of America. In fact, the US Republican House has proposed to impose a 5% tax on the money sent abroad by non-citizens in a bill introduced on May 12, 2025. That is, non-resident Indians (NRIs) living in America will now have to pay tax on sending money to their family in India. India is going to get a big shock from this decision, because the government earns a good income from the money coming from abroad.
What is the purpose?
This bill has been prepared to make the Tax Cuts and Jobs Act of 2017 permanent, increase the standard deduction and increase the child tax credit to $2,500 by 2028. President Donald Trump has called this bill excellent and has appealed to the Republicans to pass it soon. The purpose of 5% remittance tax is to raise funds through it and strengthen border security.
How will India be harmed?
This new decision of America will increase the problems of NRIs. Now they will have to pay tax for sending money to their family members in India, which will cost them more money. Since India is the country receiving the highest remittance in the world, where about 83 billion dollars come from abroad every year, most of which is from America. But under the new rule, for every 1 lakh rupees (in dollars) sent, Rs 5,000 (in dollars) will have to be paid as tax to the IRS. This will affect family support, property purchase, education expenses and other needs. Let us tell you that till now there was no tax on remittance in America, but the new policy will bring a big change in it. This will not only increase the problems of NRIs, but India will also suffer economic loss.
By when can the rule be implemented?
The Republican House aims to pass the remittance tax policy by May 26, 2025, after which it will go to the Senate. Lawmakers plan to make it a law by July 4. If it is approved, banks and money transfer services will charge a 5% tax on every transaction. This will affect the existing financial strategies of NRIs. Because now the value of every dollar sent to India will be less. This tax will apply to all legitimate channels, such as banks and NRE/NRO accounts.
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