New Delhi [India], May 18 (ANI): The Global Trade Research Initiative (GTRI) has warned that US President Donald Trump’s proposal to impose a 5% tax on international remittances sent by non-citizens will have a significant impact on Indian households, according to its latest report.
The tax is part of a broader legislative package known as “The One Big Beautiful Bill,” introduced in the US House of Representatives on May 12. If enacted, the tax would target money transfers by non-US citizens—including green card holders and temporary visa holders such as those on H-1B and H-2A visas—while exempting American citizens. The tax would be collected by banks and remittance service providers and remitted quarterly to the US Treasury.
India, one of the largest recipients of US remittances, faces substantial risks. In the fiscal year 2023-24, India received USD 120 billion in remittances, with nearly 28% coming from the United States. GTRI’s report, authored by founder and former Indian trade service officer Ajay Shrivastava, estimates that a 5% tax could reduce remittance inflows by 10-15%, resulting in an annual shortfall of USD 12-18 billion for India.
This reduction would tighten the availability of US dollars in India’s foreign exchange market, potentially causing the rupee to depreciate by Rs 1-1.5 per US dollar. The Reserve Bank of India might need to intervene more frequently to stabilize the currency.
The report also highlights the broader economic consequences for millions of families in states like Kerala, Uttar Pradesh, and Bihar, who rely heavily on remittances for essential expenses such as education, healthcare, and housing. A sharp decline in remittance flows could dampen household consumption at a time when the Indian economy is already facing global uncertainties and inflation pressures.
India is not alone in facing these challenges. Other countries like El Salvador (where remittances contribute over 25% of GDP) and Mexico (4% of GDP) could also experience significant economic difficulties if the tax is implemented.
(ANI)
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