A controversial new US bill, dubbed the “One Big Beautiful Bill,” has ignited fierce debate after the House of Representatives narrowly passed legislation imposing a 3.5 per cent tax on all outbound remittance transfers.
The measure, which targets funds sent abroad by foreign workers—including legal residents and visa holders—has drawn sharp criticism from billionaire Elon Musk and raised alarms across India, the world’s largest recipient of remittances.
Passed by a razor-thin 215-214 margin, the bill’s remittance tax provision was initially set at 5 per cent before being revised down to 3.5 per cent following pushback.
The tax will apply to electronic transfers sent from the US to recipients overseas, impacting millions of Indian families who rely on money sent by relatives working in America.
India received a record $129 billion in remittances in 2024, with nearly 28 per cent—about $36 billion—originating from the United States.
These funds are vital for household support, education, and healthcare, especially in states like Kerala, Maharashtra, Uttar Pradesh, and Bihar, where remittance flows are a lifeline for millions. Over the past decade, India’s total remittances have surged by 57 per cent, reaching nearly $1 trillion between 2014 and 2024.
The new tax is expected to significantly reduce the amount of money reaching Indian households. Experts warn that the cost of sending money home will rise, potentially causing a $12-18 billion annual shortfall for Indian families.
The bill’s broad scope means all non-citizens—including H-1B, L-1, and other visa holders, as well as green card holders—will be affected, with remittance providers required to deduct the tax before completing transactions.
Elon Musk, who has recently had a public falling out with President Trump, was among the most vocal critics of the bill. “I think a bill can be big or it could be beautiful. But I don’t know if it could be both,” Musk quipped, later calling the bill a “disgusting abomination” and warning of its impact on federal deficits and global money flows.
Musk’s criticism comes amid a broader rift with Trump over budget priorities and green energy incentives.
The remittance tax is just one part of a sweeping legislative package that also includes tax breaks on tips and overtime for middle-income earners, new savings accounts for newborns, and the rollback of green energy credits. However, it is the remittance provision that has sparked the most concern in India and among the global diaspora.
As the bill heads to the Senate, Indian policymakers, financial experts, and millions of families are watching closely. If enacted, the tax could reshape the flow of money between the US and India, with far-reaching consequences for both economies and the communities that depend on these vital funds.
