US' 5% tax on remittances expected to shave off $1.7 bn inflow into India

US President Donald Trump's proposed 5% tax on remittances will have a significant effect on India as the country is one of the biggest beneficiaries of remittances from the US.

- UMA KANNAN @Bengaluru

Rough estimates suggest the 5% tax would deprive the country of $1.6-1.7 billion in foreign exchange every year.

The proposed bill -- The One Big Beautiful Bill -- includes a 5% tax on international money transfers made by non-citizens and this means, non-immigrant visa holders (like H-1B visas) who send money to India will have to pay a remittance tax of 5%.

According to the Reserve Bank of India (RBI), with 28% of total inward remittances coming from the US, the North American country is the biggest contributor of money sent by NRIs to India.