Washington — The US Senate has proposed a significant reduction in the remittance transfer tax, lowering it from 3.5% to just 1%, offering substantial relief to non-resident Indians (NRIs) sending money abroad.
The revised draft of former President Donald Trump’s “One Big Beautiful Bill Act” notably exempts transfers made from accounts held in US banks and other financial institutions, as well as transactions carried out using debit or credit cards issued within the United States. This means that a large share of routine remittances will remain unaffected by the new tax.
Initially, the proposed bill included a 5% remittance tax, which was later reduced to 3.5% in the House-approved version.
Lloyd Pinto, Partner-US Tax at Grant Thornton Bharat, explained that Senate Republicans have now unveiled their updated draft of the “One Big Beautiful Bill Act” with plans to pass the legislation by their self-imposed deadline of July 4.
“The latest Senate version makes significant changes to the remittance tax provisions compared to the earlier House draft. The remittance tax has been brought down to 1% from the previously proposed 3.5%,” Pinto stated.
Importantly, the Senate proposal maintains exclusions for transfers from US-based bank accounts, financial institutions, and transactions made through US-issued debit or credit cards.
The revised remittance tax will apply only to transactions where the sender provides cash, money orders, cashier’s checks, or other similar physical instruments to a remittance service provider. The tax will come into effect for transfers made after December 31, 2025.
“This proposal is a major relief for the NRI community in the US. Remittances made through US bank accounts or using US-issued debit or credit cards will not attract the remittance tax,” Pinto emphasized.
With inputs from IANS