Washington— The U.S. Senate has proposed a significant reduction in the remittance transfer tax, slashing it from 3.5 percent to just 1 percent—a major relief for non-resident Indians (NRIs) who regularly send money abroad.
The updated draft of former President Donald Trump’s proposed “One Big Beautiful Bill Act” also includes critical exemptions. Transfers made from accounts held at banks and other financial institutions, as well as those made using debit and credit cards issued in the United States, will not be subject to the tax. This means that a substantial portion of everyday remittances may remain untaxed under the new framework.
The original version of the bill had proposed a 5 percent tax, which was later reduced to 3.5 percent in the version passed by the House. The Senate draft now lowers it even further.
According to Lloyd Pinto, Partner – U.S. Tax at Grant Thornton Bharat, “The updated Senate version significantly revises the remittance transfer provisions approved by House Republicans. In the latest draft, the tax has been reduced to 1 percent from the previous proposal of 3.5 percent.”
The remittance transfer tax, under the Senate’s proposal, will apply only to transactions funded by cash, money orders, cashier’s checks, or other similar physical instruments submitted to remittance providers. The tax will take effect for transfers made after December 31, 2025.
“This comes as a huge relief for the NRI community in the U.S.,” Pinto added. “Remittances made through accounts at designated U.S. banks or financial institutions, or funded via debit or credit cards issued in the U.S., will not be subject to this tax.”
The Senate Republicans have set a self-imposed deadline of July 4 to pass the bill. (Source: IANS)
