The recently passed “Big Beautiful Bill” under U.S. President Donald Trump has introduced important changes that directly affect US-based NRIs who send money to India, earn rental income from Indian properties, sell real estate, or plan to invest in Indian real estate.

In this blog, we explain how the bill impacts remittances, capital gains, rental income, and property investment decisions for NRIs in the United States.

1% Remittance Tax from January 1, 2026

One of the most significant provisions of the new bill is the 1% tax on cash remittances to India, effective January 1, 2026. This is a reduction from the earlier proposal of 5%, offering some relief but still adding a new cost for NRIs who send money home frequently or in large amounts.

Key Highlights:

• Applies to cash-based transfers only.
• Bank and card-based remittances are exempt from this tax.
• The sender bears the tax liability.

What NRIs Should Do?

• Plan large cash transfers before December 31, 2025 to avoid the new tax.

• Shift to bank/card-based transfers to stay exempt post-2025.
• Discuss remittance options with a qualified tax advisor familiar with NRI tax rules.

No Change to Taxation on Rental Income from India

The bill does not change existing U.S. tax laws regarding rental income from Indian properties. NRIs are still required to report foreign rental income on their U.S. tax returns.

Key Points:

• NRIs must report Indian rental income in the U.S.
• You can claim foreign tax credit for tax already paid in India under the U.S.-India Double Taxation Avoidance Agreement (DTAA).
• FATCA reporting requirements remain unchanged.

What NRIs Should Do?

• Continue reporting global income on U.S. tax filings.
• Use DTAA provisions to avoid double taxation.
• Keep detailed records of Indian tax paid on rental income.

Capital Gains from Sale of Property in India

If you sell a property in India, there is no change in how capital gains are taxed in the U.S. However, the repatriation of sale proceeds after January 1, 2026, may attract the new 1% remittance tax if not transferred through exempt channels.

Key Points:

• Capital gains remain taxable in both India and the U.S.
• Use foreign tax credits under DTAA to prevent double taxation.
• Cash-based repatriation of funds post-2025 may incur 1% remittance tax.

What NRIs Should Do?

• Time your property sale and fund transfer before January 1, 2026.
• Consult an expert to calculate capital gains tax in India and the U.S..
• Use bank-to-bank repatriation channels to stay exempt from the new tax.

Is It the Right Time for NRIs to Invest in Indian Real Estate?

Yes, this is still an ideal time for US NRIs to invest in Indian real estate, especially with a weaker rupee, stable property prices, and no immediate tax impact on foreign investments.

Key Advantages:

• No change in U.S. tax rules for foreign property ownership.
• 1% remittance tax starts only in 2026, giving time to invest before costs increase.
• Bank/card remittances for property purchases remain tax-free.

What NRIs Should Do?

• Invest before the remittance tax deadline.
• Monitor INR/USD exchange rates to get more value from your investment.
• Choose properties in tier-1 and high-growth Indian cities.

Action Plan for US-Based NRIs

Here’s what you should do to optimize your finances under the new bill:

Before 2026:

• Plan and complete large cash remittances.
• Sell properties and repatriate funds before the 1% tax kicks in.
• Use bank and card-based channels to transfer money.

Ongoing:

• Report all foreign income on U.S. tax returns.
• Use DTAA benefits to avoid paying tax twice.
• Maintain documents for rental income, capital gains, and tax paid in India.

With Expert Help:

• Hire a qualified CA firm experienced in cross-border taxation.
• Discuss structuring strategies for Indian investments by US NRIs.
• Ensure full compliance with FATCA and IRS global reporting requirements.

Still Confused? Let Us Help

• At Dinesh Aarjav & Associates, we specialize in:
• NRI tax planning & DTAA filings
• Repatriation of funds from India to the U.S.
• Rental income and capital gains reporting for US NRIs
• Structuring and compliance for Indian real estate investments
• We serve 2600+ global clients, including NRIs in the US, UK, UAE, Canada, and Australia.

FAQs on Trump’s Remittance Tax and Real Estate Rules for NRIs

Q. What is the new 1% remittance tax under Trump’s bill?

A. Starting Jan 1, 2026, any cash remittance sent from the US to India will attract a 1% tax, but bank and card-based transfers are exempt.

Q. Do I need to pay tax in the US on my Indian rental income?

A. Yes. U.S. tax residents, including NRIs, must report global income. You can use foreign tax credits under DTAA to avoid double taxation.

Q. Will I be taxed twice on capital gains if I sell property in India?

A. No. You will pay capital gains tax in India, and report the same in the U.S., but claim credit under DTAA.

Q. Should I invest in Indian real estate now or wait?

A. Now is a good time. The 1% remittance tax begins in 2026. Property prices are stable, and the rupee is weak, offering a favorable entry point.

Conclusion

The Big Beautiful Bill brings changes that require thoughtful financial planning for U.S based NRIs. Whether you're sending money home, earning rental income, selling property, or investing in Indian real estate, you need to stay ahead of the regulatory curve.

Plan your financial moves wisely in 2025 to save on taxes, optimize your remittances, and maximize investment value in India.