Donald Trump's "One Big Beautiful Bill" proposes a 3.5% tax on money sent from the US abroad, potentially causing significant harm to India. Elon Musk and the Senate are voicing opposition.
Bill: The 'One Big Beautiful Bill', proposed by former US President Donald Trump, narrowly passed the US House of Representatives by a vote of 215-214. This bill proposes several significant changes to the US tax system, but the most controversial provision is a 3.5% tax on remittances sent overseas. This single change could inflict substantial economic damage on countries like India.
What is the 'One Big Beautiful Bill'?
This bill is part of Trump's tax policy, incorporating domestic tax reforms alongside a tax on outward remittances. Its stated aim is to increase revenue within the US and enhance tax system transparency. The bill also includes provisions such as removing taxes on gun silencers and indoor tanning services, eliminating green energy credits, and reducing student loan programs.
Remittance Tax: The Biggest Impact on India
The bill's most contentious proposal is the 3.5% tax on remittances. Initially proposed at 5%, it was reduced following criticism. This tax would apply to money sent by foreign nationals residing in the US to their home countries. This is a significant concern for India, as it receives the largest amount of remittances globally.
How Much Will India Lose?
According to World Bank and Reserve Bank of India (RBI) data, India received approximately $129 billion in remittances in 2024. About 28% of this came from the US alone. If the 3.5% tax is implemented, India could face losses of billions of dollars annually. This loss would not only impact foreign exchange reserves but also directly affect the livelihoods of millions of Indian families.
Which States Will Be Most Affected?
Remittance dependence is significantly higher in certain Indian states. Thousands of families in states like Kerala, Uttar Pradesh, Bihar, and Maharashtra rely entirely on money sent by Indian emigrants. This tax could severely impact the rural and lower-middle-class economies of these states.
Rapid Growth in India's International Migrant Population
India's migrant population increased from 6.6 million in 1990 to 18.5 million in 2024. A significant portion of these migrants work in developed countries like the US. Indians employed in sectors such as IT, healthcare, finance, and engineering earn high salaries, contributing to the increase in remittances.
Musk and Trump's Verbal Sparring
Billionaire entrepreneur Elon Musk also expressed his disapproval of the bill. He sarcastically remarked, "A bill can be big, or it can be beautiful, but it's hard to be both." This statement further fueled the existing tension between Trump and Musk.
