New US Remittance Law: How NRIs to India Are Affected by ‘One Big, Beautiful Bill’

Trump’s ‘One Big, Beautiful Bill’ Becomes Law: What It Means for NRIs Sending Money to India.

The United States has enacted the controversial ‘One Big, Beautiful Bill Act’, a sweeping new law backed by President Donald Trump that introduces major reforms across taxation, welfare, defence, and more. Among its many provisions, one clause is already sparking concern among Indian expats in America: a 3.5% tax on foreign remittances.

Signed into law on July 4, the bill was passed by both the US Senate and House of Representatives. For the Indian diaspora—especially those on H-1B, L1, F1 visas or holding Green Cards—this change could significantly affect how much money they send home.

Key Impact: New 3.5% Remittance Tax
The legislation introduces a 3.5% excise tax on all outbound remittances from the US. That means NRIs wiring money to their families in India will now pay extra.

“This will directly hit Indian immigrants supporting families back home,” says Bikramjit Bedi, Tax Partner at ASA & Associates LLP.

In FY24 alone, India received nearly $33 billion in remittances from the US—roughly 28% of its total global inflows, per the RBI. A decline in this figure could affect household spending and financial support systems in India.

Legal and Compliance Hurdles
Tax professionals are also highlighting potential legal ambiguities:

The US tax may not qualify for credit relief under the India-US Double Taxation Avoidance Agreement (DTAA) because it’s an excise levy, not income tax.

Unlike India’s TCS rules, which offer exemptions for education and medical transfers, the US bill offers no such relief.

Compliance will likely become more complex, with banks needing to collect additional data on remitters’ nationality and tax status.

“This adds paperwork and confusion, especially for temporary visa holders who frequently remit funds,” said Deepashree Shetty, Partner – Global Employer Services, BDO India.

A Costly Burden for NRIs
For many Indians in the US, especially students and early-career professionals, the tax could serve as a disincentive to send regular support home. It also raises questions about how this law aligns with longstanding India-US tax treaties.

“It’s not just about paying more — it’s about the burden of proving you’ve paid it correctly,” experts caution.

The ‘One Big, Beautiful Bill Act’ introduces a remittance tax that could reshape financial habits for NRIs in the US. With no exemptions and unclear relief mechanisms, many may think twice before transferring money to India. For the Indian economy and families that rely on this support, the impact could be significant.