US govt strikes to chop proposed tax on outward remittances to three.5% from 5% -OxBig News Network

The One Big Beautiful Bill Act handed by the US House of Representatives on Thursday (May
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New Delhi

The US authorities has determined to chop the tax it plans to levy on outward remittances despatched to different international locations — together with India — from the sooner deliberate 5% to three.5%. This change was carried out by an modification to the One Big Beautiful Bill Act handed by the US House of Representatives on Thursday (May 23, 2025).

The original version of the Bill, which contained sweeping adjustments to the US’ revenue tax, healthcare, company tax, and nationwide debt stage rules, had proposed a 5% excise tax on remittance transfers which might be paid by the sender. 

Now, the US House of Representatives, whereas passing the Bill, additionally accepted a listing of amendments to it. Among these was one regarding the speed of excise responsibility on remittances, saying “strike ‘5 pe rcent’ and insert ‘3.5 per cent’”.

The Bill will now need to be handed by the Republican-majority Senate within the US earlier than it turns into legislation.

The Hindu has learnt that the Indian authorities has not but made any estimation of what impression such a tax would have on inward remittances. Reserve Bank of India information reveals the US is the biggest supply of remittances to India, accounting for 27.7% or  $32.9 billion of the remittances that flowed into the nation in 2023-24.

“A tax on remittances would certainly dent the remittances coming into India,” a authorities official informed The Hindu. “But the government has not yet made an assessment of what that dent will be.” 

The official additionally added that India has additionally not but taken a name on whether or not to method the US for some reduction within the matter or not. 

According to tax specialists, the impact could be quite significant on Indians living in the US, and will push a few of the remittances they ship to India to the gray and even black market. In the brief time period, nevertheless, it could result in a spike in such remittances. 

“On outward remittance from US to India, for Indians who are green card holders or H1b/other visa holders living in the US, these groups will be subject to an extra 3.5% tax on remittances over and above the income taxes they may have paid,” Lloyd Pinto, Partner – US Tax at Grant Thornton Bharat defined. 

“In the short term we expect remittances to India to spike before the effective date of Jan 1, 2026,” Mr. Pinto added. “We may also see a shift of some remittances from formal to informal channels.”