The U.S. House Ways and Means Committee has proposed a controversial tax plan — The One Big Beautiful Bill — that could significantly impact millions of Indians in America. Buried on page 327 of the 389-page bill is a clause introducing a 5% remittance tax on all money sent abroad by non-U.S. citizens. This includes:
- H-1B and L-1 visa holders
- Green card holders
- Other non-citizen residents
If passed, the law would withhold 5% of the remitted amount at the point of transfer, without any exemption threshold — even small transactions would be taxed.
Why This Matters to Indians in the US
With nearly 45 lakh Indians living in the U.S. — 32 lakh of them Persons of Indian Origin (PIOs) — this bill could have massive financial implications.
- In 2023–24, $32 billion was remitted to India from the U.S.
- A 5% tax means a $1.6 billion burden on the Indian community annually.
The tax applies even to:
- Money sent to family members in India
- Transfers for property purchases or investments in Indian markets
Who’s Exempt and Who’s Not?
The bill states the tax won’t apply if the transfer provider is a “qualified remittance transfer provider” and the sender is a “verified U.S. sender” — defined as a citizen or national of the U.S.
This means:
- Non-citizens, even green card holders, aren’t exempt
- U.S. banks or platforms handling remittances will withhold the tax before processing transfers
What Happens Next?
- The House of Representatives plans to pass the bill in May 2025
- It will then proceed to the Senate
- Experts expect it could become law by June or July
Advisors are already urging Indian residents in the U.S. to send larger remittances now to avoid the upcoming tax hit.
Broader Impact & Reactions
The move has triggered concern across the Indian community and financial experts:
- It could discourage foreign remittances and affect families relying on monthly transfers
- May increase cost of cross-border investments in India
- Critics argue it undermines the contributions of skilled workers on H-1B and similar visas
While the bill frames the tax as part of a larger economic reform, its disproportionate impact on immigrant communities is likely to fuel legal and diplomatic discussions in the coming months.
