Introduction
A new U.S. legislative proposal has sparked widespread concern among Indian expatriates, especially those working under H-1B, F-1, and other non-immigrant visas. Titled the “Big Beautiful Bill,” this proposed law seeks to impose a 5% tax on international remittances made by non-U.S. citizens. For Indian residents abroad who routinely send money to family or invest in India, this could mark a significant financial shift.
In this blog, we unpack everything you need to know — from what the bill proposes, who it affects, how it compares with India’s own remittance policies, and what you can do to prepare.
What Is the Proposed 5% Remittance Tax?
Under the “Big Beautiful Bill,” non-citizens in the U.S. — including H-1B visa holders, F-1 students, green card holders, and undocumented immigrants — may be charged 5% on every international money transfer they make using unverified or non-qualified remittance services.
Example:
Sending ₹1,00,000 (approx. $1,200) to India could attract a tax of ₹5,000 (around $60) — on top of any bank or service fees.
Who Will Be Affected?
The proposed tax applies to a broad base of people:
H-1B visa holders (skilled professionals)
F-1 and J-1 visa holders (students and researchers)
Green card holders
Undocumented immigrants
Any non-U.S. citizen using unverified remittance services
Only verified U.S. citizens using approved remittance channels would be exempt.
When Does It Take Effect?
The Act is now in force, with implementation deadlines starting from July 4, 2025. This offers a limited window to prepare and reassess your remittance strategy.
Why Is This Bill Being Introduced?
The stated purpose of this bill is to:
Curb unregulated cash outflows from the U.S.
Encourage use of official remittance channels
Track international fund movements more efficiently
Generate federal tax revenue without raising domestic taxes
For policymakers, it mirrors measures like India’s Tax Collected at Source (TCS) under the Liberalised Remittance Scheme (LRS) — but in reverse.
Impact on NRIs and Indian Families
1. Higher Cost of Remitting Funds
Indian families receiving monthly support from loved ones in the U.S. may see reduced amounts or increased burden on the sender.
2. Lower Inflows to India
India received over $125 billion in remittances in 2023, with around 28% coming from the U.S. This policy may dampen the volume.
3. Exchange Rate Volatility
Reduced remittance inflows could marginally affect India’s foreign exchange reserves and put pressure on the INR-USD exchange rate.
4. Tax Complexity
If this remittance tax works like TCS in India, it may be treated as advance tax — refundable when filing U.S. returns, but only for those eligible.
Comparison with India’s Own Remittance Tax Policy (TCS)
| Aspect | U.S. Remittance Tax (Proposed) | India’s TCS on Foreign Remittances |
| Rate | 5% on outward transfers | 5–20% on outward foreign spends |
| Applies To | Non-citizens in the U.S. | Indian residents sending money abroad |
| Refundable? | Possibly during tax filing | Yes, as income tax credit |
| Objective | Curb untracked outflows | Curb overseas fund drain |
How to Prepare Financially
If you’re an Indian resident in the U.S., here’s how you can stay ahead:
Track Legislative Updates
This bill is not yet passed. Stay informed by following updates through reliable news and government sources.
Consult with a Tax Advisor
Understand how this may affect your U.S. and Indian tax filings. Double taxation, remittance rules, and refund eligibility may get more complex.
Explore Qualified Remittance Providers
Ensure your service provider is approved by the U.S. Treasury to potentially avoid the additional 5% burden.
Plan Larger Remittances Strategically
If the bill becomes law, timing and volume of your future transfers will require careful planning.
What Should Indian Families Expect?
Fluctuation in remittance amounts
Delays in expected payments
Greater scrutiny from banks and RBI (if trends shift)
Need for financial planning support
Final Thoughts from PGA & Co.
While the proposed 5% remittance tax is still under legislative review, it raises important questions about the cost of cross-border financial support, particularly for the Indian diaspora in the U.S. At PGA & Co., we understand the tax and financial challenges faced by NRIs and their families.
Whether you’re planning to remit funds, manage tax liabilities in both countries, or need advice on cross-border investments, our experts are here to help — with compliance, clarity, and confidentiality.
For more tailored guidance, explore our HNI and NRI financial planning solutions that ensure seamless cross-border compliance and wealth structuring.
Need Guidance?
We invite NRIs and Indian families to reach out to us for personalized advisory on:
Cross-border taxation
Remittance planning
Dual tax compliance
NRI investment support
Pgaca.in is here to guide you, Make a call at 86998-87200 or DM us on LinkedIn for a confidential consultation.
FAQs (Frequently Asked Questions)
Q1. Is the 5% remittance tax now in effect?
Yes. The law has passed and takes effect from July 4, 2025.
Q2. Can I claim this tax back in the U.S.?
Possibly, depending on your residency status and whether you file a return using a Social Security Number.
Q3. Will this tax affect remittances to other countries?
Yes. It applies to all international transfers made by non-U.S. citizens — not just to India.
Q4. Can this influence India’s forex and economy?
Yes. Lower remittances may impact foreign reserves and exchange rate stability.