Athira Sethu
Kochi, 19 May 2025
One proposed new law in the United States is raising eyebrows in India. The proposed law plans to impose a 5% tax on remittances sent by non-US nationals to their parent countries. That would mean individuals residing in the US but not being citizens—like those on green cards or working visas (e.g., H-1B and H-2A)—would be forced to pay an additional fee when remitting money overseas.
This is included in a bigger bill known as “The One Big Beautiful Bill” that was presented to the US House of Representatives.
This tax has the potential to make a huge difference in India, where families rely significantly on remittances from relatives who work in the US, says the Global Trade Research Initiative (GTRI).
India saw $120 billion worth of remittances (remittances or money sent from overseas) in the year 2023–2024. Of this, an estimated 28% was from the United States. If this new tax legislation passes, it will increase the cost of sending money home. That might cause more individuals to send less money, and India might lose somewhere between $12 and $18 billion annually.
If fewer dollars enter India, the rupee (India’s currency) may dip. The Reserve Bank of India (RBI) may have to intervene more frequently to stabilize the rupee. In the worst scenario, the rupee might decline Rs 1 to Rs 1.5 per US dollar.
That would be particularly difficult for Indian state families such as Kerala, Uttar Pradesh, and Bihar, where the bulk of people are dependent on remittances sent by their loved ones working abroad. They spend that on essential such as healthcare, education, and shelter. A drastic decline in remittances would be detrimental to their day-to-day lives.
