Proposed US Tax on Remittances Raises Economic Alarm in India

A proposed 5% US tax on remittances sent abroad by non-citizens is causing significant concern in India, as experts warn it could adversely affect Indian households and the rupee's value. Economic think tank Global Trade Research Initiative (GTRI) shared these concerns on Sunday.

The tax forms part of 'The One Big Beautiful Bill,' introduced in the US House of Representatives, targeting money transfers by non-citizens, including green card holders and temporary visa workers. However, the levy exempts US citizens.

India, receiving USD 120 billion in remittances in 2023-24, with 28% of it coming from the US, could face a drastic shortfall if the tax is implemented. GTRI founder Ajay Srivastava indicated this could pressurize the rupee, necessitating more frequent interventions by the Reserve Bank of India to stabilize the currency.

(With inputs from agencies.)