Sending Money from the US to India? A New Tax Could Make It More Expensive
If you’re someone who sends money from the US to India, maybe to support your family, help with education, or just stay connected, there’s something new you should know. A recent bill in the US House of Representatives wants to add a 3.5% tax on every international money transfer made by people who aren’t US citizens. That includes green card holders, H-1B and L-1 visa workers, students, and many others.
For Indian families and friends living in the US, this news is a big deal. Sending money home is already an act of love and responsibility. Now, it might become a lot more expensive.
What Does the New Remittance Tax Mean?
Remittance is the money someone sends from one country to another, usually to help family or friends and now the new remittance tax is different from previous rules, as it means a special extra charge on the money transfer, which was not required before.
Who Will Be Affected?
The new remittance tax isn’t for everyone, just for people in the US who aren’t citizens. That means:
- Indian workers on H-1B, L-1, and other work visas
- Students on F-1 and J-1 visas
- Green card applicants and holders
- Other temporary residents sending money to India
And if you’re a US citizen, you won’t have to pay this extra tax.
How Much Will It Cost?
Imagine you want to send $10,000 to your family in India. With the new remittance tax, you’ll have to pay an extra $350. If you send $1,000 every month, your family will get about $36 less each time, unless you send a bit more to cover the tax.
When Will It Start?
Right now, the bill is just a proposal. It still needs to be approved by the US Senate. If it passes, the tax could start from January 1, 2026.
Why Is This a Big Deal for India?
India is the world’s top receiver of remittances. In 2023, Indians living abroad sent home a record $119 billion. The US is the largest source, sending about $32–$36 billion to India each year.
For many Indian families, these remittances are a lifeline. They help pay for food, school, medical bills, and even weddings. Remittances also help the Indian economy by covering nearly half of the country’s trade deficit.
What Will Change If the Tax Is Passed?
- Sending money home will be more expensive: Every transfer will cost 3.5% more.
- NRI account inflows could drop: Some people might send less money or look for other ways to transfer funds.
- Costs for moving employees will rise: Companies with workers in the US might find it harder to send money home.
- The investment could shift: Some people might prefer to keep their money in the US, rather than send it to India.
- The tax credit may not apply: Experts say this excise tax may not qualify for foreign tax credit relief, so Indian workers in the US could end up paying more overall.
What Should You Do?
- Stay informed: Keep an eye on the news and updates about the bill as it moves through the US Senate.
- Plan ahead: If the tax becomes law, think about how it will affect your family and your finances.
- Look for alternatives: Ask your bank or money transfer service about the best ways to send money if the tax is introduced. Sometimes, talking to a financial advisor can help you find better options.
In conclusion, I would like to say that sending money to India is more than just a transaction. It is a way to care for your loved ones and help them build a better life, and this new US remittance tax could make this act of kindness more expensive for millions of Indian families. While the bill is not law yet, it’s important to be prepared and understand how it could affect you.
By staying informed, planning ahead, and looking out for each other, you can make the best decisions for your family and your future.