Trump's 5% Tax on Remittances: Should NRIs Fast-Track Real Estate Investments Back Home?
Under the proposed Trump law, H1B and Green Card holders' remittances would face a 5% tax, increasing the cost of NRI real estate investments in India. This article explores the implications and what NRIs should consider.
Real EstateRemittancesNrisDonald TrumpTax ImplicationsReal Estate NewsMay 19, 2025
US President Donald Trump's decision to impose a 5% tax on international remittances sent by non-citizens is likely to significantly affect real estate investments back home, say experts. (Photo for representational purposes only)(Pexels)
Tax experts say the proposed levy under new Republican tax provisions aims to collect tax at source on remittances sent from the United States to foreign countries, potentially reducing the funds available for property purchases in India.
“While US citizens may claim credit for such amounts against their tax liabilities, non-citizens would effectively bear this as a direct tax on outward remittances,” says Pallav Narang, Partner, CNK, an all services firm.
The global uncertainty resulting from a series of conflicts, the impact of AI on employment, the tariff war, and other factors, the majority of Indian immigrants desire to transfer their savings to their homeland. “A 5% loss of this remittance money is a substantial amount, given the trend of remittances to India surpassing $125 billion in CY 2024,” says Suneel Dasari, CEO, EZtax.in.
All remittances transferred by a non-immigrant visa holder, such as H1B visa recipients and Green Card holders, would be subject to a 5% tax under the proposed Trump law.
What would it mean for NRIs in the US investing in Indian real estate
The cost of purchasing property in India for Non-Resident Indians (NRIs) may increase due to new tax implications. Previously, an NRI looking to buy a property worth $100,000—equivalent to approximately ₹80 lakh (at ₹80 to a dollar)—could remit ₹80 lakh from their taxed income in the US to complete the purchase. However, under the updated regulations, they must now remit ₹84 lakh, which includes an additional 5% tax.
This increase in remittance, coupled with the extra 5% cost, raises the overall financial burden for NRIs investing in Indian real estate, making property acquisition notably more expensive.
The cost of purchasing property in India for Non-Resident Indians (NRIs) may increase due to new tax implications. (HT Graphic)
Any monthly remittance sent from the US to India to cover EMIs would attract the 5% (if the proposal is passed). This tax would apply to the total remittance amount, so if you're sending ₹1 lakh per month, you'll need to send ₹1.05 lakh, of which ₹5,000 would go toward the tax, raising your effective EMI cost. If you are planning to purchase your home through EMIs, you may consider remitting a lump sum that covers a year's worth of EMIs (or more) before the new rule is implemented.
India’s remittance tax versus the proposed 5% tax in the US
India imposes a remittance tax, which functions as an advance tax collected through the Electronic Clearing System (ECS). This tax is refundable, as taxpayers can claim a credit for it, effectively reducing their financial burden. In contrast, the proposed 5% tax in the United States is an indirect tax that offers no credit or refund to Non-Resident Indians (NRIs).
“Consequently, this tax represents an additional, non-recoverable cost for NRIs, increasing the expense of remitting funds for investments such as property purchases in India,” says Vivek Jalan, partner, Tax Connect Advisory Services.
What should NRIs do?
“Whether or not one intends to purchase property, any planned remittances should be made to India immediately. Doing so before the proposed tax comes into effect can help avoid the additional 5% levy,” says Jalan. If you were planning a property purchase in the next 6–12 months, it may be prudent to advance your remittance schedule to lock in lower overall costs. This can help you avoid the non-refundable 5% tax, which would otherwise increase your acquisition cost.
Anagh Pal is a personal finance expert who writes on real estate, tax, insurance, mutual funds and other topics
Frequently Asked Questions
What is the proposed 5% tax on remittances?
The proposed 5% tax on remittances, under new Republican tax provisions, aims to collect tax at source on remittances sent from the United States to foreign countries, specifically affecting non-citizens.
How does this tax affect NRIs investing in Indian real estate?
The 5% tax increases the cost of purchasing property in India for NRIs. For example, an NRI buying a property worth $100,000 would need to remit ₹84 lakh instead of ₹80 lakh, including the additional 5% tax.
What should NRIs do to avoid the 5% tax?
NRIs should consider remitting funds to India immediately to avoid the additional 5% tax. If planning a property purchase in the next 6–12 months, advancing the remittance schedule can help lock in lower costs.
Is the 5% tax refundable?
No, the proposed 5% tax in the United States is an indirect tax that offers no credit or refund to Non-Resident Indians (NRIs), unlike India's remittance tax.
What is the current trend in remittances to India?
Remittances to India have been on the rise, surpassing $125 billion in CY 2024. The proposed 5% tax would significantly impact this trend, making it more costly for NRIs to transfer funds.
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