US President Donald Trump's One Big, Beautiful Bill, which has been cleared by the US House of Representatives and now advanced to the Senate, will add financial pressure on Indian nationals working in the US.
The bill which contains a remittance tax of 5% on non-US citizens will impact the flow of funds to countries like India. "There can be a decline in gross remittance thus impacting rupee stability in the long-run. The US has been one of the largest contributors to India's share of funds from diaspora remittance for years. Most of the immigrants in the US are non-citizens thus it will impact the majority of them," said Saurrav Sood- Practice Leader- International Tax & Transfer Pricing at SW India.
He added that it will be interesting to see how India deals with it at the WTO level, whether it can be challenged on grounds of unfair practice or unilateral measures impacting fair trade policies norms.
According to RBI data, India’s remittances from the US stood at $33 billion in FY24. If the bill is enacted, then India might need to forego $1.65 billion in remittances.
Lloyd Pinto, Partner, US Tax - Grant Thornton Bharat said the bill now moves to the Senate which will debate this in June and there could be potential changes to the legislation before it is expected to be enacted. "However, based on current drafts, any outbound remittance irrespective of the amount made by Green card holders or other individuals who are on other non-immigrant visas in the US will be subject to an additional 5% tax on remittance they make to India," he said.
They may have already paid taxes on their US income and this is an additional cost and they are unlikely to get any tax credits for the same. This is proposed to go into effect from January 1, 2026, and we expect to see individuals plan significant remittances before this new tax kicks in, he added. Amarpal Chadha, Tax Partner and Mobility Leader, EY India is of the view that many Indian nationals working in the US may be forced to re-evaluate their remittance patterns, including the amount and frequency of remittances for the purpose of maintenance of family or investment in India.