Datanomics: Remittance tax in Donald Trump's 'Big, Beautiful Bill'

US remittance Bill: Cost of sending money to India to shoot up to 9%

The Trump administration has dropped another bombshell after the ‘tariff tantrum’. A provision in a bill called The One, Big, Beautiful Bill has proposed a five per cent excise tax on all outward remittances from the US, irrespective of the amount, to be paid by the sender.

 

The tax will be applicable on all outward remittances by non-US citizens, including individuals holding H-1B and F-1 visas and green card holders. 

 

The share of the US as a source country in India’s inward remittances has risen from 22.9 per cent in 2016–17 to 27.7 per cent in 2023–24. 

 

The bill, if passed, is going to pinch Indians the hardest, as the cost of sending money from the US to India will rise. In Q4 CY24, the cost of sending $200 and $500 (as a percentage of the remittance amount) from the US to India was 4.32 per cent and 2.98 per cent, respectively. Adding five percentage points to these would raise the cost to 9.32 per cent for $200 and almost 8 per cent for $500, ceteris paribus.