India-America Relations / Now it will be easy to send money from America to India, big relief in tax

India-America Relations: A big relief news has come for the Indian immigrants (NRIs) settled in America. In the new draft of 'One Big Beautiful Bill Act', the remittance tax has been reduced to just 1%. While in the initial proposal, this tax was to be kept at 5%, it was later reduced to 3.5%. Now in the latest version of the Senate, it has been further reduced to 1%, which is going to give great relief to Indians.

On which transfers will the tax be levied?

According to the report of ET, the new remittance tax will be applicable only on certain types of transfers after December 31, 2025. The most important thing is that:

Transfers made from US bank or financial accounts

Payments made through debit or credit cards issued in America

This tax will not be levied on all these. That is, people will be saved from tax in cases like everyday transactions and sending most of the family support.

What will be the impact on India?

According to 2023 data, more than 2.9 million Indians live in the US, making them the second largest expatriate community in the US. According to the Reserve Bank of India, India received about $32 billion in remittances from the US in 2024 — which is about 27.7% of the total global remittances. If this tax had remained high, it could have made it difficult to provide financial support to Indian families.

Who will have to pay tax?

This bill will especially affect those NRIs who:

• Are non-citizens (such as students, highly skilled workers, green card holders)
• Students who send money to India by earning from part-time jobs
• Those who put money in NRE accounts or invest in real estate
• A 1% tax may be applicable to them, due to which they will have to rethink their financial planning.

What will be the impact?

Due to the 1% tax, the burden on remittances will be much less than before. However, some people may choose to send smaller amounts — especially those who regularly support their families in India or are investing in property. The good news is that bank transfers and card payments will not be taxed, which will provide relief to most people.

When will it be implemented?

This new tax will be implemented after December 31, 2025. This means that the NRI community will get enough time to adjust their financial strategy.