A new bill in the United States is causing deep concern among immigrant communities, especially among the 2.3 million Indians living and working there. The proposal introduces a 5% excise tax on every dollar sent abroad, which could significantly impact families, investments, and financial support flowing back to India. In 2023 alone, Indians in the US remitted over $23 billion to India, supporting their families, funding education, and investing in property or business ventures. With this proposed tax, those remittances will now come with a substantial cost.
For example, someone sending $1,000 monthly to family in India would now lose $50 each time to tax, amounting to $600 per year. To ensure their family receives the full amount, they would have to send over $1,050 monthly, increasing their out-of-pocket expense. Larger transfers, such as $10,000 for education or real estate, would incur a $500 tax, requiring a transfer of $10,526 to cover the full need. Even smaller transactions, like $200 monthly, would see $10 deducted each time—an annual loss of $120.
The tax would apply to all categories, including wage earners on H-1B or F-1 visas, green card holders, and NRIs earning from stocks or investments. With no exemptions for small amounts, every remittance would be affected. Since nearly 28% of India’s remittances originate from the US, the tax could redirect $1.6 to $1.7 billion away from Indian households, affecting essential spending on education, healthcare, and housing.
Experts are raising concerns about double taxation, as these funds have already been taxed in the US, and it’s unclear whether senders will get tax credits. The proposed tax might also reduce NRI interest in Indian investments, impact foreign exchange reserves, and encourage risky informal transfer methods. Real estate markets in cities like Mumbai, Delhi, and Hyderabad could suffer, as developers depend heavily on NRI buyers.
With a possible implementation by July 2025, financial advisors are urging NRIs to complete major transfers ahead of time and reconsider their remittance strategies to minimize losses and adapt to the new costs.
Recent Random Post:
