Sending money home could soon cost US NRIs ₹2,900 per ₹83,000 transfer
Updated: Jun 4th, 2025
Indians living in the United States may soon face higher costs when sending money home, as a proposed US law could impose a 3.5% remittance tax on cross-border fund transfers. The bill, titled the One Big Beautiful Bill, has already been passed by the House of Representatives and is expected to become law once it clears the Senate and receives presidential assent.
If enacted, the measure would mean that sending ₹83,000 (approximately $1,000) to India would incur a remittance tax of around ₹2,900 (roughly $35). This would be in addition to any income tax already paid by the sender.
Millions could be affected
The remittance tax is likely to affect a wide range of Indian immigrants and visa holders in the US, including H-1B and L-1 workers, F-1 students, green card holders, and others who regularly remit money to their families in India.
India is the world’s largest recipient of remittances. In FY 2023–24 alone, Indians received $33 billion from the US, accounting for nearly 28% of all outbound US remittances. A tax on these transfers could significantly disrupt this flow.
‘A lifeline, not a luxury’
The bill has sparked concern among Indians residing in the US, particularly students and migrant workers. For many, remitting money is not a choice but a lifeline. Students whose families have invested their life savings in their education feel a strong responsibility to support loved ones back home. An added tax, they fear, will only deepen the financial strain and could seriously impact their ability to continue these essential transfers.
Disproportionate burden on lower-income migrants
Critics argue that the proposed remittance tax will disproportionately burden middle- and lower-income immigrants. Many students on F-1 visas, for example, send money home to support family members despite already facing high tuition and living expenses. Small business owners and low-wage workers in the US also rely heavily on remittance channels to assist families in India.
Economic impact on recipient countries
Economists warn that the bill could have wider consequences beyond individual senders. Reduced remittance flows may impact household consumption in India, particularly among rural and low-income families. Foreign exchange reserves in several global-south nations, such as India, Mexico, the Philippines, and Nigeria may also come under pressure if remittance volumes decline.
Legal uncertainty and workarounds
In response, remitters may shift strategies—opting for larger lump-sum transfers, using digital wallets, or turning to peer-to-peer platforms to reduce transaction fees. However, legal and tax experts are closely examining whether the proposed levy is compliant with existing Double Taxation Avoidance Agreements (DTAAs) between the US and countries like India.
While DTAAs primarily cover income taxes, questions remain over whether a remittance tax might violate non-discriminatory clauses embedded in such treaties. US officials have yet to clarify whether the 3.5% charge would be treated as an excise duty, transaction fee, or something else.
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