Washington D.C./New Delhi, July 4, 2025 — With U.S. President Donald Trump’s Big Beautiful Bill clearing Congress, a wave of concern has emerged among Indian Non-Resident Indians (NRIs) living in the United States. The primary cause? A new 1% tax on remittances—a policy shift that could affect everything from monthly family support to major property transactions in India.
The legislation, which underwent multiple revisions since its introduction, has now landed on a final structure: a 1% levy on cross-border cash transfers, replacing the earlier proposed 5% and the House’s 3.5% draft. While smaller than expected, the tax still introduces a new cost that NRIs must now factor into their financial planning.
What the Bill Says
The text of the bill states clearly: “There is hereby imposed on any remittance transfer a tax equal to 1% of the amount of such transfer.” It further adds that the sender will be responsible for paying this tax.
This tax will apply only to cash-based remittance transfers, which means bank transfers, card-based channels, and digital wallets remain exempt for now. The new tax will be enforced starting January 1, 2026.
Implications for NRIs Sending Money to India
Many Indian-origin residents in the U.S. send money back home regularly—to support their families, pay EMIs, or fund investments. For them, this new 1% tax creates an additional layer of cost.
While it may seem small at first glance, it becomes significant for high-value or recurring transfers. For example, a transfer of $10,000 would incur a $100 tax. The cumulative effect over a year could lead to a noticeable financial impact for NRIs who transfer money frequently or in large amounts.
How It Affects Rental Income and Property Sales
The bill does not alter existing U.S. tax rules related to rental income or capital gains earned from Indian real estate. NRIs who own property in India are still required to report global income on their U.S. tax returns and pay the applicable taxes under the existing tax regime.
This includes:
- Rental income from Indian properties, which must be reported under U.S. laws.
- Capital gains on the sale of Indian real estate, which continue to be taxed in both countries with relief provided through the U.S.-India Double Taxation Avoidance Agreement (DTAA).
What changes, however, is the cost of remitting proceeds from such sales. After 2025, any cash-based transfer of sale earnings back to the U.S. will attract a 1% tax, making it more expensive to repatriate profits.
Should NRIs Still Invest in Indian Real Estate?
Despite the remittance tax, the fundamentals of investing in Indian property remain unchanged for NRIs. The bill does not impact ownership rules or rental income taxation. And with property prices stabilising in many Indian cities, coupled with a relatively weaker rupee, the current moment still holds opportunity for those eyeing investments in India.
What changes is the timing and method of funding those investments. Sending large sums after the 1% remittance tax kicks in could mean additional costs. Therefore, those planning major property purchases or financial transactions in India may want to reassess their timelines.
Key Takeaways for NRIs
- The 1% remittance tax begins January 1, 2026, and applies to cash-based remittances only.
- Bank and card-based remittances remain exempt, making them the preferred method of transfer post-2025.
- Rental income and capital gains taxation remain unchanged under U.S. law.
- Remitting property sale proceeds after 2025 using cash-based methods will become costlier.
- NRIs may want to complete major financial transfers before December 31, 2025, to avoid the new levy.
With the bill now passed, all eyes are on how financial institutions and remittance service providers adapt. Many are expected to offer new remittance tools and exemptions aligned with the latest policy to help NRIs manage the change.
For now, Indian NRIs in the U.S. should take stock of their cross-border finances, evaluate the most efficient remittance channels, and plan large transactions ahead of the 2026 deadline.
