Indian Diaspora Reacts to Proposed US Remittance Tax
New 5% tax could cost billions, impact families relying on remittances
Visakhapatnam: A new tax provision in US legislation has sparked concern among immigrant communities, particularly the Indian diaspora, who could collectively face over a billion dollars in additional costs annually.
If implemented, this tax would affect non-immigrant visa holders and green card holders alike – in sum, any non-citizen sending money abroad.
The proposed legislation, colloquially referred to as "the one big, beautiful bill," aims at imposing a 5 per cent tax on money transfers made by non-US citizens to anyone outside the US. The provision is seen on page 326 of the 389-page document titled Remittance.
According to cross-border investment experts, the bill is likely to gain immediate approval. The House of Representatives aims to pass it this month, after which it will move to the Senate. It could become law as early as June or July. They are advising Indian expatriates to consider larger fund transfers in the coming weeks to avoid the impending tax.
K Ashok, former board member of the Telugu Association of North America (TANA), voiced his concern. "Remittances are not merely financial transactions, they are critical support systems for families abroad, often covering essential needs like healthcare, education and disaster relief," he noted.
He emphasized that such a tax "risks placing additional financial strain on law-abiding, tax-paying residents who contribute meaningfully to the US economy." There must be a careful evaluation of policies "for their broader social and economic implications, particularly their disproportionate impact on vulnerable populations," he said.
RGK Prasad, whose son Karthik works at a finance company in Texas, responded: "The companies must bear the tax, rather."
Pravallika Patruni, a healthcare data engineer in Virginia, Richmond, who holds US citizenship, said that the tax initiative aims to curb illegal immigration while generating vital revenue for domestic programs. She believes that by financially penalizing those who employ undocumented workers, this policy reinforces border security and legal compliance standards.
She said revenue collected would fund workforce development programs, creating pathways to reduce dependence on unauthorized labour and enable American businesses to flourish with legally employed workers.
Patruni raised concern about diplomatic relationships and impacts on labour-intensive industries and proposed that the affected sectors should engage with government officials to ensure manageable transitions and invest in developing domestic talent pipelines.
