US President Trumps 5 Per Cent Tax On Remittances To Significantly Impact Indian Households: GTRI

New Delhi: US President Donald Trump’s choice to impose a 5 according to cent tax on world remittances despatched through non-citizens will considerably have an effect on Indian families, mentioned the Global Trade Research Initiative (GTRI), a trade-focused analysis team, in its newest record.

The proposed US legislative transfer has precipitated alarm around the globe, in particular in India, which has been one of the vital greatest beneficiaries of US remittances. These provisions are a part of a significant legislative package deal titled “The One Big Beautiful Bill”, presented in the United States House of Representatives on May 12. If enacted, the regulation would goal cash transfers made through non-US residents, together with inexperienced card holders and employees on transient visas like H-1B and H-2A. The proposed regulation exempts American residents.

According to the foundations, the tax can be amassed through banks and remittance carrier suppliers, who would remit the price range quarterly to the United States Treasury. For India, the stakes are prime. The nation won USD 120 billion in remittances in 2023–24, with just about 28 according to cent originating from the United States. A 5 according to cent tax may considerably carry the price of sending cash house, GTRI mentioned within the remark, which used to be ready through its founder and previous Indian Trade Service officer Ajay Srivastava.

The record anticipates {that a} 10–15 according to cent drop in remittance flows may lead to a USD 12–18 billion shortfall for India yearly. That loss would tighten the availability of US bucks in India’s foreign currencies marketplace, hanging average depreciation power at the rupee, the record added.

The Reserve Bank of India could also be compelled to intrude extra regularly to stabilise the forex. The rupee may weaken through ₹1–1.5 according to US greenback if the remittance surprise totally materialises, the record added.

“The pain wouldn’t stop at the exchange rate. In states like Kerala, Uttar Pradesh, and Bihar, millions of families rely on remittances to cover essential expenses such as education, healthcare, and housing. A sudden decline in these flows could hit household consumption hard—at a time when the Indian economy is already navigating global uncertainty and inflationary pressures,” the GTRI record added.

Globally, India isn’t by myself. Countries like El Salvador, the place remittances account for over 25 according to cent of GDP, and Mexico (4 according to cent of GDP), may additionally enjoy painful repercussions, the GTRI famous within the record.