US Tax Proposal on Remittances: What It Means for NRIs and Indian Families
Overview of the US Tax Proposal
A new proposal from the US government has raised concerns among Indian professionals and families who send remittances back home. This initiative aims to impose a 5 percent tax on outbound remittances made by non-citizens, including Non-Resident Indians (NRIs). If enacted, this legislation could significantly drive up the costs associated with transferring money to India, which heavily impacts those who contribute vast sums each year.
Impact on NRIs and Indian Families
Indian NRIs are the largest contributors to remittances, with a significant portion coming from the United States. Currently, this demographic sends approximately $50 for every $1,000 remitted home. Under the new proposal, this amount would increase to $50 in tax, creating a considerable financial burden on Indian families relying on these funds.
Changing Trends in Remittances
The U.S. This shift is attributed to the rise of white-collar Indian professionals who work in the U.S. and earn higher salaries compared to their counterparts in Gulf nations. As the Indian diaspora continues to grow, the projected remittances for FY25 are expected to escalate to $128 billion. However, the proposed tax could strain NRIs’ finances and, ultimately, India’s foreign inflows.