Watch: US Remittance Tax Update: 5% Proposal Became 1% Rule for NRIs
Updated guide: the old 5% remittance-tax proposal became a 1% rule for cash, money orders, cashier's checks and similar physical instruments from January 1, 2026.
The full write-up, with the numbers and the links.
Chapters
- 0:00 Intro
- 0:50 What is the Proposed 5 Remittance Tax
- 2:14 Impact on NRIs
- 3:30 What we know so far
- 4:09 Common questions
- 5:02 Steps to take
- 5:54 Conclusion
Transcript
Auto-generated captions, lightly cleaned
0:01 Hello and welcome back. If you are an NRI living in US and send money to India regularly, this video is a mustwatch. A new bill proposed in US Congress called the one great and the beautiful tax bill includes a 5% tax on international remittances by non US citizens. It is not a law yet but it's gaining attention fast. This would impact lot of Indian families. So let's break it down. What is this tax? Who will get impact? When could it take effect? And what can you do? So let's dive
0:52 In. First, what is the proposed 5% remittance tax? In simple terms, if you are a non US citizen and you send money from US to any other country, you would pay a 5% tax on the total amount sent. This would apply to H1, L1, all visa holders as well as green card holders. So for example, an NRI sending $1,000 to India could be charged a $50 in tax right at the source. The stated goal is to generate revenue and discourage the use of US taxpayer funded services by non- US citizens. But the direct impact it hits the immigrant families hard especially
1:52 Those who support loved ones back home. So the tax would be collected by the financial institution or remittance service before the money leaves your account. So this tax is collected at the source and is given to the US government.
2:17 So let's talk how this would affect us. For many NRIs, remittance are not a optional. They are essential. They help pay for elder care, children's education, medical bills, and day-to-day living. Imagine you're sending a $3,000 a month. That's a $150 loss just in taxes over a year. It's about $1,800 gone. Think of it like all the savings that you have, you have to pay 5% when you want to transfer that money to India. That's huge. And it's also not just for individuals. India is one of the top recipient of global remittance. From US alone, there was $37 billion that was remitted annually. This tax could discourage legal transfer of that money flow. There
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3:19 Is also a risk that could push people towards informal or unsafe money transfer routes, including chances of fraud or loss.
3:33 So, what do we know so far? The bill is still under discussion, but if it passes, it could take into effect as early as July 2025. Next, only US citizens are exempt from this international remittance tax. If you are on a visa or green card holder, you are likely to be affected. There are no lower limits whether you are sending $100 or $10,000. The tax applies across the
4:11 Board. So some common questions that we are hearing does this apply to NRE or NRO accounts? Yes, if you're transferring funds from US the tax applies before it hits your Indian account. The 5% is deducted at the source before the transfer happens to your Indian bank account. Can we avoid this by splitting the transfers or using different services? Not really. The tax is per transaction irrespective of the amount and most formal services will be required to comply with this new rule once it becomes in law. any exemptions for education or medical transfers. As of now, no specific carveouts have been mentioned in the
5:04 Bill. This might sound frustrating, but here are the steps that you can take. First, stay informed. Follow updates on this bill. We will continue to cover it here. Plan ahead. If you are planning for a major remittance, consider sending them earlier before this tax potentially could take effect. If you're moving from US to India, this is another big thing that you need to plan. Talk to your financial advisor, explore the options, alternate legal remittance channels and how does this affect your broader investment plans and plan accordingly. Keep the documentation in case of audits or future tax reviews. You want to have that paper
5:56 Trail. Yes, this proposal is concerning, but being proactive is our best strategy. Financially, legally, and as a community, we can face it together. Don't forget to subscribe. We will keep you updated with the latest development and expert advice. Thank you for watching. Stay informed, stay connected and take care.
