The US has reduced its planned remittance tax from 5% to 3.5%.

• The U.S. government has reduced the tax on remittances sent to other countries, including India, from 5% to 3.5%.

• The change was implemented via an amendment to the One Big Beautiful Bill Act, passed by the U.S. House of Representatives.

• The original version of the Bill proposed a 5% excise tax on remittance transfers, which would be paid by the sender.

• The amendment also included a rate of excise duty on remittances, stating “strike 5% and insert 3.5%”.

• The bill will need to be passed by the Republican-majority Senate in the U.S. before it becomes law.

• The Indian government has not yet estimated the impact of the tax on inward remittances.

• Tax experts predict the impact could be significant on Indians living in the U.S., potentially pushing some remittances to the grey or black market.