US tax of 5% on outward remittances to impact NRIs |
For Indian Green Card holders and those with visas in US, a new proposed 5% tax on foreign remittances could have profound financial implications. India is numero uno among recipient of remittances. Of the around $83 billion received by India every year, much of it from the United States. Indian associations are gearing up to counter the proposed bill. The Bill will make the 2017 Tax Cuts and Jobs Act permanent, increasing the standard deduction and extending the child tax credit to $2,500 through 2028. This significant shift in U.S. tax policy, especially for foreign workers who regularly send money to their families abroad, is bound to be opposed. US President Donald Trump has endorsed the legislation, calling it “GREAT” and urging Republicans to ensure its passage. Proponents say the 5% remittance tax will help fund extended tax breaks and support border security initiatives, potentially raising billions for the U.S. Treasury. But it hurts hardworking immigrants who send money back to their countries of origin to support their families.
Under the proposed law, from every transfer of US$ 100 a sum of US $ 5 will go to tax and only US$ 95 reach families in India or sender’s home country. US lawmakers want to rush through the Bill. The House intends to pass it by Memorial Day, May 26, 2025. The Senate wishes to pass it and turn it into law by July 4th. This new tax can be enforced easily through financial institutions and money transfer services. US NRIs are preparing for quick response to oppose the Bill.
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