Last year, India received more money through remittances than foreign direct investment (FDI). The US had earlier proposed a 5% tax on money being sent from America to India.
However, the US Senate has now decided to impose only a 1% tax. This change will significantly affect the flow of remittance money coming into India.
Jagdish Vyas and his wife, who receive money from their two daughters living in America, were concerned about the earlier proposal.
Their daughters had settled in the US after completing their education. The news of a 5% tax had worried them, but now they feel relieved that the tax has been reduced to just 1%.
This update is like a celebration for millions of Indians who regularly send their hard-earned money home—to support families, repay loans, or invest in India.
Jagdish Vyas told CNBC-Awaaz, “We live comfortably with the money sent by our daughters.
Now that the US Senate has decided on just a 1% tax, it will positively impact the amount of money being sent to India through remittances.”
India’s Remittance Economy
As per World Bank and RBI data, India received a total of ₹11.60 lakh crore in remittances from abroad in the financial year 2024–25. Over the last eight years, the remittance amount has doubled. Around 25% of this amount comes from the United States.
Millions of Indians settled in the US send large sums not only to their families but also to temples and for social work in their home villages.
According to FOGA Vice President Manish Sharma, a huge amount is sent from America every year for the development of Indian villages.
No Tax on Digital Transfers
The good news is that if the money is sent digitally from America using a card, there will be no tax. Most Indians use bank transfers, debit cards, or credit cards to send money.
Under the new rules, these digital methods are tax-free. So, sending money to India digitally won’t come with any tax worries.
