The latest US Senate version excludes transfers from accounts held at banks and other financial institutions, and also excludes transfers made via debit and credit cards issued in the United States.
This means that a large portion of day-to-day remittances may fall outside the scope of the new tax.
The remittance tax, as per the Senate proposal, will apply only to applicable transfers made after December 31, 2025.
The ‘One Big Beautiful Bill Act’ sparked concern among the Indian diaspora in the United States due to its potential impact on outbound remittances.
Originally, the bill sought a 5% tax, but the final House version lowered it to 3.5%, triggering concerns among NRIs (Non-Resident Indians), many of whom send regular remittances back home to support families or invest in India.
Indians are the second-largest foreign-born group in the U.S., numbering over 2.9 million as of 2023, according to the Migration Policy Institute. In FY24, the U.S. accounted for 27.7% of India’s total inward remittances, translating to nearly $32 billion, as per RBI data.
Who Will Be Affected
Under the bill, only non-citizens—including highly skilled professionals, students, and green card holders—would be subject to the remittance excise tax. Even student income from part-time jobs or internships, if remitted home after graduation, could be taxed.
This tax could reduce the incentive to send money to India.
It may also affect NRE account deposits, real estate purchases, and corporate mobility programs, especially for employees receiving U.S. compensation or stock options.
