Trump plans to make sending remittances from U.S. costlier

After raking tariff war, the Trump administration now plans to impose a 5% tax on all remittances sent from the United States

Washington: After raking tariff war, the Trump administration now plans to impose a 5% tax on all remittances sent from the United States.

A Republican fiscal bill titled “The One Big Beautiful Bill” is set to impose a 5% tax on all international remittances made by non-citizens, including Indian H-1B visa holders, L-1 intra-company transferees and even green card holders.

Millions of foreigners working in the United States send hundreds of thousands of dollars to their home countries. India alone received around $32 billion in remittance from the United States in 2023-24, as per the Reserve Bank of India (RBI) estimate.

This is about 28% of the total $118.7 billion India received in remittances from different countries in 2023-24.

Impact on India

There are an estimated 4.5 million Indians in the United States – the largest after the United Arab Emirates (UAE) and Saudi Arabia. The remittances sent by the overseas Indians in one of the major sources of foreign currency for India.

The House Budget Committee will vote on the bill Friday. It will be tabled in the House next week if it gets the House Budget Committee nod.

If the bill is passed, Indian diaspora in the United States will be required to pay a whopping $1.6 billion as remittance tax.

Other Provisions in the Bill

Besides imposing 5% tax on remittances, Trump’s “The One Big Beautiful Bill” has a number of other provisions including the massive tax cuts envisioned by the U.S. President in his first term, and provisions to modify State and Local Tax (SALT) deductions.

Other major proposed cuts will hit programmes like Supplemental Nutrition Assistance Programme or SNAP, which helps 42 million low-income individuals afford groceries and comes at a time when food costs are still 2 percent higher than a year ago.

The Bill also calls for making $880bn in cuts to key government programmes with a focus mostly on Medicaid and food stamps.

The bill also introduces work requirements to receive benefits, mandating that the recipients must prove they work, volunteer or are enrolled in school for at least 80 hours each month.

The bill also aims to introduce new taxes on colleges, including a varying tax rate based on the size of a university’s endowment per student.

[The writer, Zohair Mohammed Safwan Faizee, is Staff Writer at ummid.com. With inputs from Agencies]

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