Sending Money to India from the US Could Soon Cost More

Non-Resident Indians (NRIs) residing in the United States who regularly send money to their families in India may face a financial setback due to a newly proposed taxation measure. A group of Republican Party members has introduced a draft bill seeking to impose a 5% tax on all remittances sent abroad by individuals without U.S. citizenship. Referred to as the "Big Beautiful Bill," the proposed legislation is expected to come into effect from July 4 this year, if enacted into law.

This tax will apply to funds sent for family needs, education, healthcare, or investments. For example, if an individual remits ₹100,000 to their parents in India, an additional ₹5,000 would have to be paid as tax. The tax will be collected by remittance providers and submitted to the U.S. government on a quarterly basis.

The new tax would impact individuals on visas such as H-1B, F-1, J-1, as well as green card holders and undocumented immigrants. However, U.S. citizens and nationals are exempt from this tax if they use government-approved ‘qualified’ remittance providers.

India, which is the world's largest recipient of foreign remittances, could face a significant decline in inbound funds if this tax policy is implemented. Experts warn that this might affect the country’s foreign exchange reserves and could potentially weaken the value of the Indian Rupee.

According to the Ministry of External Affairs of India, approximately 4.5 million Indians live in the United States. A large number of them regularly send money back home to support family expenses, education, healthcare, or for property purchases.

At present, the bill remains in the proposal stage and must be approved by both houses of the U.S. Congress to become law.