Daijiworld Media Network - Washington

Washington, Jun 28: In a move welcomed by the Indian diaspora, the US Senate has proposed reducing the controversial remittance transfer tax from 3.5% to just 1%, offering significant relief to non-resident Indians (NRIs) sending money abroad.

The change comes as part of the revised version of President Donald Trump’s "One Big Beautiful Bill Act", which is currently being refined in the Senate ahead of a self-imposed July 4 deadline for passage.

The earlier version of the bill had originally proposed a 5% tax on remittances, which was later brought down to 3.5% by the House. The latest Senate draft not only reduces the rate further but also narrows the scope of taxable transactions.

Key Exemptions

According to the updated provisions:

• Transfers made from accounts at US banks and financial institutions will not be subject to the tax.
• Remittances using debit or credit cards issued in the US will also be exempt.

This means that most daily remittance transactions carried out by NRIs through their regular banking channels or cards are likely to fall outside the purview of the tax.

The 1% remittance tax will apply only to transfers involving cash, money orders, cashier’s checks, or other similar physical payment instruments, typically associated with walk-in money transfer services. These changes will take effect after December 31, 2025.

Expert View

“This is a huge relief for the NRI community in the US, especially those who frequently send money to India,” said Lloyd Pinto, Partner – US Tax at Grant Thornton Bharat. He noted that the Senate's latest draft introduces key exclusions that effectively shield a majority of personal remittances from being taxed.

As the bill moves closer to finalization, NRIs can expect greater clarity and reduced financial strain when transferring money back home—so long as they use approved banking or card-based channels.

The final version of the bill still needs to clear Senate approval and presidential assent to become law.