US President Donald Trump proposed the "One Big Beautiful Bill Act." The bill gives tax breaks, reduces government spending, and strengthens border security. It also includes a proposal to tax remittances, with limited exceptions.

Some parts of the bill contain promises that President Trump made during his campaign. These parts would be temporary, lasting roughly through the end of his second term in office.

This proposed tax could significantly impact Indians working in the US. The US recently overtook West Asian countries to become the top source of remittances to India.

According to the Reserve Bank of India’s 6th Round of India’s Remittances Survey, the US accounted for the largest share of remittances at 27.7%, followed by the United Arab Emirates at 19.2%. India’s total remittances touched $118.7 billion in 2023-24. These remittances form a key part of India’s foreign exchange reserves.

The bill proposes a 5% tax on remittances. The service provider, which includes any US bank, would impose this tax. The same provider must remit the collected tax quarterly to the Secretary of the Treasury.

The bill also states, “The remittance transfer providers have secondary liability for any tax that is not paid at the time that the transfer is made.” So, providers remain responsible if the tax is not collected during the transaction.

The only exemption in the bill applies to verified US citizens and US nationals. These individuals would be classified as “Qualified remittance transfer providers” by the service provider, through a written agreement with the Secretary of the Treasury.

The bill does not use monetary limits to define exemptions. Instead, it uses the individual’s nationality as the deciding factor. This means even small transfer amounts would attract a 5% tax if sent by a non-exempt person.

This move could affect many people on H1B and L1 visas. Many of them are Indian professionals. Over 70% of all H-1B visas issued between October 2022 and September 2023 were received by Indian skilled workers, according to data shared in the Rajya Sabha.