In what could be a significant relief for non-resident Indians (NRIs), the latest draft from the US Senate has reduced the proposed remittance transfer tax to 1%, down from the earlier 3.5%.
Crucially, the Senate draft exempts transfers made from accounts held at banks and other financial institutions, as well as transfers made via debit and credit cards issued in the US.“This should come as a huge relief to the NRI community in the US as they will not be subject to this remittance tax if the remittances are made through accounts held with designated US banks and financial institutions or funded via debit or credit cards issued in the US,” said Lloyd Pinto, partner – US Tax, Grant Thornton Bharat.
According to the draft, the remittance transfer tax will apply only when the sender uses cash, a money order, a cashier’s check, or similar physical instruments to initiate the transfer. This tax provision is set to apply to transfers made on or after December 31.
The updated draft was released by Senate Republicans on June 27 as part of the proposed One Big Beautiful Bill Act, with a self-imposed deadline of July 4 to pass the legislation.Compared to the earlier version passed by House Republicans, the Senate’s revised draft marks a significant shift, particularly in its treatment of remittance transfers.