Datanomics: Remitting money to India from US now becomes costlier

Sending money from the US to India has become costlier after a 1% excise tax on cash-based remittances took effect from January 1, 2026

As part of the “One Big Beautiful Bill Act”, a new one per cent excise tax on international money transfers (remittances) from the United States (US) came into effect from January 1, 2026. The tax applies to the remittances made in cash, a money order, or other physical instruments, increasing the cost of sending money to India for a sizeable Indian diaspora in the US. The tax does not apply if the money is sent through US banks or paid using debit or credit cards issued by US banks.  

 

US has largest share in remittances to India

 

Nearly 28 per cent of India’s inward remittances came from the US alone in 2023-24, with its share rising from 22.9 per cent in 2016-17. The United Arab Emirates and United Kingdom followed with shares of 19.2 per cent and 

10.8 per cent, respectively, in 2023-24. 

 

Cost of remitting from US has risen in past 6 years

 

The cost of remitting $200 from the US to India rose 44.4 per cent during the six years ended Q1 of 2025, even as it fell in the latest quarter compared to the previous three months. The trend of sending higher amounts — $500 — is similar.  

 

Remitting from Thailand is the costliest

 

Among the major remittance corridors of India, with countries having a significant Indian diaspora, Thailand and Japan were the costliest in terms of sending money to India, while the UAE and UK were among the cheapest.