Trump’s remittance tax sours Indian view of US dream

The US Home of Representatives narrowly handed President Donald Trump’s “One Large Stunning Invoice” on Might 22, which features a 3.5 per cent excise tax on remittances despatched overseas by non-US residents and non-nationals.

The proposed laws, if authorised by the Senate, may considerably impression hundreds of thousands of Non-Resident Indians (NRIs) in america, lots of whom repeatedly ship cash to relations in India.

Underneath the invoice, people on H1B, L1, and F1 visas, in addition to Inexperienced Card holders, can be topic to the tax beginning January 1, 2026. As an example, a $1,000 switch to India would incur a $35 tax, decreasing the quantity acquired to $965. The tax can’t be offset towards federal or state taxes and is along with any current taxes paid.

India, the world’s largest recipient of abroad remittances, acquired roughly $129 billion in 2024, with 28 per cent originating from the US, in response to the World Financial institution. The International Commerce Analysis Initiative (GTRI) warns that the brand new tax may lower remittances to India by 10-15 per cent, representing a lack of $12-$18 billion yearly.

Moreover, Trump’s administration has tightened immigration guidelines, considerably limiting worldwide pupil admissions and imposing stricter circumstances for work visas. These mixed measures have led some Indian nationals to rethink plans for finding out or working within the US.

Strained India-US relations

The transfer, mixed with restrictions on worldwide college students and demanding feedback on India-Pakistan points, is straining US-India relations.

President Trump has claimed credit score for brokering a ceasefire between India and Pakistan following escalating tensions earlier this month. He said that US intervention prevented a “dangerous nuclear warfare” between the 2 nations, asserting that commerce negotiations performed a key position in de-escalating the battle.

Nonetheless, Indian officers have refuted these claims, emphasising that the ceasefire was a results of direct military-to-military communication between India and Pakistan, with out third-party mediation. India’s Ministry of Exterior Affairs reiterated that the understanding was reached bilaterally and warned towards exterior narratives that would misrepresent the scenario.

The mixture of the remittance tax proposal and contentious statements concerning worldwide diplomacy has led some Indians to rethink plans to review or work within the US, doubtlessly affecting long-term bilateral commerce negotiations and diplomatic relations.

With inputs from businesses