Key Points

The revised draft of US President Donald Trump’s "One Big Beautiful Bill Act" excludes transfers from accounts held at banks and other financial institutions, and also excludes transfers made via debit and credit cards issued in the United States. It means that a large portion of day-to-day remittances may fall outside the scope of the new tax.

Originally, the bill sought a 5 per cent tax but the final House version lowered it to 3.5 per cent.

According to Lloyd Pinto, Partner-US Tax, Grant Thornton Bharat, Senate republicans released their updated draft of the proposed ‘One Big Beautiful Bill Act’ and have a self-imposed deadline of July 4 to try to pass this bill.

“The updated Senate version significantly changes the remittance transfer provisions that was passed by the House Republicans. In the latest Senate draft, the remittance transfer tax has been reduced to 1 per cent from the erstwhile proposal of 3.5 per cent,” he said.

Notably, the Senate proposal excludes transfers from accounts held at banks and other financial institution and also excludes transfers made via debit and credit cards issued in the United States.

The remittance transfer tax will apply only to any remittance transfer for which the sender provides cash, a money order, a cashier’s check, or other similar physical instrument to the remittance transfer provider. This tax will apply to transfers made after December 31, 2025.

“This should come as a huge relief to the NRI community in the US as they will not be subject to this remittance tax if the remittances are made through accounts held with designated US bank and financial institutions or funded via debit or credit cards issued in the US,” Pinto noted.

- IANS