In a move poised to bring significant relief to the non-resident Indian (NRI) community in the United States, the US Senate has proposed a substantial reduction in the remittance transfer tax—from the previously proposed 3.5% to just 1%. This revision is part of the updated draft of US President Donald Trump’s legislative package titled the “One Big Beautiful Bill Act.”
The Senate version of the bill, released by Republican lawmakers, notably narrows the scope of transactions subject to the tax. Under the new proposal, remittances from accounts held at US banks and financial institutions—as well as those made via debit and credit cards issued in the United States—will be excluded from taxation. This means a majority of routine NRI remittances are likely to fall outside the ambit of the new levy.
Earlier drafts of the legislation had proposed a 5% tax, which was subsequently reduced to 3.5% in the House version. The Senate’s move to further lower it to 1% comes ahead of a self-imposed July 4 deadline to finalize and pass the bill.
Commenting on the development, Lloyd Pinto, Partner – US Tax at Grant Thornton Bharat, said:
“The updated Senate version significantly changes the remittance transfer provisions that were passed by the House Republicans. The remittance transfer tax has been reduced to 1% from the earlier proposal of 3.5%. Moreover, the exclusions will provide significant relief to NRIs.”
The remittance tax will only apply to transfers where the sender uses cash, money orders, cashier’s checks, or other similar physical instruments. The revised tax is slated to take effect on transfers made after December 31, 2025.
Tax experts believe that the exclusions for electronic bank transfers and card-based transactions will ensure that most NRIs are shielded from additional financial burdens when sending money to India.
This proposed change, if enacted, could positively impact the remittance ecosystem and bolster the flow of funds from the US to India by minimizing regulatory costs and simplifying compliance.
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