GTRI: Trump administration is planning to impose tax on money sent from US, may affect the income of Indian families

The US government of Donald Trump plans to introduce a 5% duty on funds sent by foreign nationals to their nations. Indians have raised concerns in regard to it as it can impact Indian families' incomes. This was said by GTRI on Sunday.

A bill was introduced in the House of Representatives on May 12. It's dubbed as 'The One Big Beautiful Bill'. It contains a clause to introduce a 5% tax on funds transferred by non-residents to their homelands. This clause will extend to non-US citizens, i.e., green card holders or those who have temporary working visas (e.g., those with H-1B or H-2A visas). This tax will not extend to US citizens.

The Global Trade Research Initiative (GTRI) said that this proposed tax is causing concern in India because if it becomes law, India could lose billions of dollars in currency from the US every year. It said, this is an important matter for India, as the country receives remittances of $ 120 billion in 2023-24, of which about 28 percent came from the US.

GTRI founder Ajay Srivastava said a five percent tax could significantly increase the cost of sending money home. A 10-15 percent reduction in remittances could lead to a loss of $ 12-18 billion every year to India. He said that this loss will reduce the supply of US dollars in India's foreign exchange reserves, which could put slight pressure on the rupee.

He said the Reserve Bank of India (RBI) may have to intervene repeatedly to stabilize the rupee. If the impact of remittances is fully felt, the rupee may fall by Rs 1-1.5 per dollar. Millions of families in states like Kerala, Uttar Pradesh, and Bihar depend on remittances, which help them meet essential expenses like education, health care, and housing.