‘New US law to impose $1,000 tax on Rs 1 lakh NRI remittances’: Expert on One Big Beautiful Bill

Last week, the US Congress passed former President Donald Trump’s “One Big Beautiful Bill,” ushering in a 1% tax on international remittances sent through cash, money orders, or cashier’s cheques. The new levy specifically targets money transfers by non-U.S. citizens, including green card holders and temporary visa holders such as those on H-1B or H-2A visas, while U.S. citizens remain exempt.

India, the world’s largest recipient of remittances, is among the countries expected to feel the biggest impact, alongside other significant recipients like Mexico, China, the Philippines, France, Pakistan, and Bangladesh.

“The new tax specifically targets cash-based remittance methods like money orders, cashier’s cheques, or physical cash transfers,” explained Dinkar Sharma, Company Secretary and Partner at Jotwani Associates. “It’s part of broader US fiscal reforms aimed at curbing informal money flows and increasing revenue collection.”

Importantly, the legislation leaves untouched the U.S. taxation of rental income and capital gains from Indian real estate owned by NRIs. “NRIs are still required to report worldwide income, including rental earnings and property sale gains in India, on their U.S. tax returns,” Sharma clarified. “These obligations are governed by existing rules and the India–US Double Taxation Avoidance Agreement. The new excise tax does not alter those compliance requirements.”

For NRIs contemplating significant transfers, timing has now become a critical financial consideration. Transfers completed before December 31, 2025, will avoid the new levy, potentially saving thousands of dollars.

“A $100,000 remittance made via a non-exempt channel in 2026 would attract a $1,000 tax,” Sharma pointed out. “Beyond the tax cost, the bigger issue is the compliance trail. Every transaction will require meticulous documentation and could trigger dual reporting under US laws, like FATCA and Indian tax regulations.”

What Indian expats must know

Sharma advised: “It’s wise for NRIs to consult both U.S. and Indian tax professionals to plan high-value transfers before the new law takes effect. This isn’t just about saving 1%—it’s about avoiding complex compliance headaches.”

Bank-based and card-based remittance channels, however, remain exempt from the new tax. “Transfers made through regulated U.S. banks, credit unions, or via U.S.-issued debit and credit cards remain tax-free,” noted Sharma. “But NRIs must exercise caution. Some fintech services operate through hybrid systems—like virtual wallets—which might not qualify for exemption. It’s crucial to verify and document the remittance method to avoid unintended taxation.”

Sharma added, “While this tax only applies to a specific subset of remittance methods, NRIs should be proactive. Strategic timing, choosing the right transfer channels, and maintaining proper records will help avoid both financial losses and regulatory pitfalls.”

As the January 2026 deadline approaches, Indian expats are urged to stay informed and act swiftly to safeguard their finances and compliance standing.