New Delhi: US President Donald Trump’s recently passed “One Big Beautiful Bill,” approved narrowly by the House of Representatives on May 22 by a margin of 215-214, includes a controversial provision that could significantly impact remittance flows to India, the world’s largest recipient of overseas money transfers.
A key element of the bill proposes a 3.5% tax on all outbound remittances sent from the United States to foreign recipients. Originally, this tax was set at 5% but was lowered following strong opposition. The tax targets money transfers by foreign workers residing in the US—including legal residents with green cards and temporary visa holders such as H-1B employees.
Billionaire entrepreneur Elon Musk has been a vocal critic of the bill, calling it “big but not beautiful,” underscoring the tensions between him and President Trump.
Impact on India’s Remittance Inflows
According to data from the World Bank and the Reserve Bank of India (RBI), India received roughly $129 billion in remittances in 2024 alone—an amount nearly equal to the combined annual budgets of Pakistan and Bangladesh. The largest share of these funds comes from Indian expatriates in the United States.
If enacted, the new remittance tax could reduce billions of dollars flowing into India, adversely affecting millions of households that rely on these funds. Over the past decade, India’s remittances grew by 57%, totaling nearly $1 trillion ($982 billion) from 2014 to 2024.
States like Kerala, Maharashtra, Uttar Pradesh, and Bihar, where remittance money forms a vital part of household incomes, are likely to feel the greatest impact.
Effect on Indian Migrant Workers
India’s international migrant population has increased sharply—from 6.6 million in 1990 to an estimated 18.5 million in 2024. While many continue to work in Gulf countries, a growing number of Indian professionals are now employed in the US, especially in sectors such as IT, healthcare, finance, and engineering.
Recent statistics reveal that nearly 78% of Indian workers in the US hold high-income jobs, contributing to a rise in remittances from the US—from 23.4% of India’s total in 2020-21 to 28% in 2023-24.
The Global Trade Research Initiative (GTRI) warned that “the proposed US tax on remittances by non-citizens could result in billions of dollars lost annually to India’s foreign currency inflows,” according to PTI reports.
The remittance tax is just one part of President Trump’s comprehensive legislation aimed at fulfilling key campaign promises. Other significant provisions include eliminating federal taxes on tips and overtime for individuals earning under $160,000 annually; creating “Trump Savings Accounts” with a $1,000 initial deposit for newborns and an annual contribution limit of $5,000; repealing excise taxes on gun silencers and indoor tanning; increasing the SALT deduction cap from $10,000 to $40,000 for joint filers earning under $500,000—though this faces opposition in the Senate; rolling back green energy tax credits for electric vehicles and residential solar installations; and making substantial cuts to student loan programs. As this bill moves forward, its broader economic implications, particularly for countries like India that heavily rely on remittance inflows, continue to attract close attention.
