Introduction

A sweeping legislative proposal is shaking up the U.S. financial and immigration landscape — and if you're an Indian national living in the U.S., it's time to pay close attention. The "One Big Beautiful Bill (H.R.1)", introduced in the U.S. House of Representatives on May 12, 2025, has passed the House and is now on its way to the Senate. Among its many provisions, one stands out for the global Indian community: a new 3.5% excise tax on international remittances by non-citizens. At Rupeeflo, we’re breaking down what this proposed law means for you — whether you’re an H-1B professional, a student, a Green Card holder, or an OCI cardholder — and how you can prepare before it comes into effect on January 1, 2026.

📜 What Is the "One Big Beautiful Bill"?

The bill, officially titled H.R.1, is an omnibus legislative package focusing on U.S. budget reforms, border security, and — importantly for our audience — taxation on outbound money transfers.

The relevant section (Subchapter C, Section 4475) introduces a 3.5% excise tax on all international remittances made by non-citizens, ostensibly to:

• Fund immigration and border enforcement programs,

• Reduce unmonitored money flows from the U.S. to foreign countries, and

• Create a more accountable framework for cross-border money movement.

💰 Who Will Be Affected?

This provision has wide-ranging implications for the Indian diaspora in the U.S. Here's a quick breakdown:

🔍 Important Insight: Only U.S. citizens can claim this 3.5% tax back — as a refundable credit — when they file their federal tax return, provided they submit supporting documentation and a valid SSN.

How Will It Work?

💸 At the Time of Transfer

• A flat 3.5% excise tax will be automatically deducted by remittance providers like Rupeeflo.

• The tax is levied on the sender, not the receiver.

• For example, if you send $1,000 to India, $35 will be withheld.

🔁 Claiming a Refund

• Only U.S. citizens can claim the refund via Section 36C of the IRS code.

• Required steps:

  • Provide your SSN to the remittance provider.

  • Retain the annual tax statement provided by the remittance provider.

  • File this information with your IRS tax return.

📦 A Real-World Example

Let’s say Raj, a U.S. citizen, sends $10,000 to India using Rupeeflo:

• $350 is deducted as tax.

• Raj gets a statement from Rupeeflo.

• He includes the tax details in his IRS filing.

• He receives a $350 refundable credit — effectively reversing the cost.

But if Raj were on an H-1B visa or held an OCI card, he wouldn't be eligible for this refund. The tax would simply be a cost he has to bear.

🏦 What Do Remittance Providers Need to Do?

According to Section 6050BB of the bill, qualified remittance providers are expected to:

• Verify the citizenship status of each sender.

• Deduct and submit the 3.5% tax for applicable transfers.

• File quarterly tax reports with the IRS.

• Provide annual tax summaries to customers.

• Maintain SSN records of eligible senders for refund purposes.

⚠ Non-compliance will attract penalties, as outlined in Section 6724(d).

At Rupeeflo, we're preparing our systems to fully comply with these new requirements, ensuring your transfers remain seamless and transparent — even in the face of regulation.

📅 Key Dates to Know

✋ What Can You Do Now?

As the bill moves closer to being signed into law, here’s how you can stay ahead:

1. Plan Large Transfers Before December 31, 2025: Any transfers made before the law kicks in will not be subject to the 3.5% excise tax.

2. Use Compliant Providers: Ensure you use a regulated remittance platform like Rupeeflo, which will provide the necessary documentation if you’re eligible for a refund.

3. Stay Informed: This bill is still not law — yet. Stay tuned with Rupeeflo as we monitor its status through the Senate vote and potential amendments.

4. Review Your Status: Understand your visa or citizenship status and what that means for your ability to claim refunds.

5. Talk to a Tax Expert: Especially if you’re planning to send large amounts or want to understand how this fits into your larger tax planning.

Final Thoughts

The remittance tax proposal under the "One Big Beautiful Bill" could mark a major shift for the Indian diaspora in the U.S., particularly for those who regularly send money to loved ones back home. While the intention is to enhance accountability, the financial impact could be significant for NRIs, students, and Green Card holders.

At Rupeeflo, our mission is to help NRIs navigate financial regulations and optimize their money movement across borders. As always, we’ll continue to keep you informed, compliant, and ahead of the curve.

📢 Disclaimer: As of this writing, the bill has only passed the U.S. House of Representatives. It must still be approved by the Senate and signed by the President to become law.