Are you an NRI in the USA sending money to India? Here’s an important update that affects your financial planning.

The U.S. Senate has officially reduced the proposed remittance tax under the "One Big Beautiful Bill Act" from 3.5% to just 1%. The change provides major relief to Non-Resident Indians (NRIs) who regularly transfer money to India to support family, invest in real estate, or contribute to NRE/NRO accounts.

What Is the US Remittance Tax?

The US remittance tax is a proposed excise tax on cross-border money transfers made by non-citizens, including Indian NRIs, green card holders, and international students. Initially proposed at 5%, it was reduced to 3.5% by the House, and now, the Senate has capped it at 1%.

Key Highlights:

• New tax rate: 1% on international remittances
• Applies to: Only non-US citizens
• Effective Date: After December 31, 2025

Who Is Exempt from the Remittance Tax?

The revised bill includes critical exemptions for commonly used remittance channels. These are not subject to the 1% remittance tax:

• Transfers from US bank accounts and financial institutions
• Money sent using US-issued debit or credit cards

This means that most NRIs sending money to India using mainstream channels like Wise, Remitly, ICICI Money2India, or bank wire transfers may not be affected—if the transfer originates from a US-based financial source.

Who Will Be Impacted by the US-India Remittance Tax?

The proposed remittance excise tax applies only to non-citizens, which includes:

• NRIs on H-1B, L-1, or O-1 visas
• Green card holders
• F1/OPT students
• Indian expatriates working or studying in the US

Possible Taxable Remittances:

• Real estate investments in India
• Deposits into NRE/NRO accounts
• Support money sent to family
• Money sent from stock options, bonuses, or sale of assets
• Even remittances from internship stipends or student income may be taxed if transferred after graduation.

How Will This Affect NRI Financial Planning?

This change could impact the financial and tax planning of Indian residents abroad, especially those who:

• Send recurring remittances to support parents in India
• Invest in Indian real estate or mutual funds
• Deposit funds in NRE/NRO accounts
• Repatriate funds from US salary/investments to India

Though the new tax is only 1%, it adds up for high-value transactions. Planning your remittances smartly can save tax and optimize currency transfer fees.

When Will the 1% Remittance Tax Apply?

The remittance tax will only apply to transfers made on or after January 1, 2026. NRIs have time to plan large transfers, real estate deals, or NRE deposits before that date to avoid taxation.

Top FAQs on US Remittance Tax for NRIs

1. Does the 1% tax apply to all money transfers to India?
No. Only applicable to certain transfers by non-citizens using non-exempt channels.

2. Will NRE/NRO deposits be taxed?
Yes, if they involve taxable transfers. But not if funded via exempt sources like US banks.

3. Should NRIs worry?
With proper NRI tax planning, most routine remittances will remain unaffected. The exemption for banks and card-based transfers is a major relief.

Expert Tip for NRIs Sending Money to India

To avoid paying remittance tax in 2026:

• Use US bank accounts or US-issued credit/debit cards
• Transfer larger amounts before December 31, 2025
• Consult a qualified NRI tax advisor to optimize your remittance strategy

Work With India’s Leading NRI Tax Experts

At Dinesh Aarjav & Associates, we specialize in:

• NRI remittance planning
• Cross-border taxation
• NRE/NRO account advisory
• Real estate transaction tax planning
• Double Taxation Avoidance Agreement (DTAA) strategies

25+ years experience
Clients in USA, Canada, UK, UAE, Australia
Personalized compliance & repatriation solutions