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There’s been a buzz around the recent “One Big, Beautiful Bill” passed by the US House of Representatives, and naturally, many of you – our valued Indian investors at Vested Finance – are wondering: how will this affect my US stock investments?
The good news is, for the vast majority of you investing in US stocks and bringing your profits back to India, this bill is not expected to directly impact your investment withdrawals.
Let’s break down what’s in the bill and what it truly means for you.
The Heart of the “Big Beautiful Bill”: Remittance Tax
The primary focus of this legislation is a new excise tax on international money transfers (remittances) made by non-US citizens. This tax, now reportedly set at 3.5% (down from an earlier proposed 5%), is designed to apply to individuals residing in the US who send money to family or for personal support back in their home countries.
If you are an Indian resident investing in US stocks through Vested Finance, and you sell your US stocks and transfer the proceeds directly from your US brokerage account to your Indian bank account, this is considered investment repatriation, not a personal remittance. Therefore, this 3.5% excise tax is not expected to apply to your investment withdrawals.
Why Your Investment Withdrawals Are Safe
A key provision in the proposed legislation is popularly referred to as the “Big Beautiful Bill” introduces an excise tax on certain international remittances. To understand who is affected, it’s crucial to look at how the bill defines a “sender” under Section 920(g) of the Electronic Fund Transfer Act (EFTA).
According to the EFTA, a “sender” is defined as “a consumer in a State who requests a remittance transfer primarily for personal, family, or household purposes.” This means that the new excise tax is squarely aimed at individuals residing in the United States who send money abroad for personal or familial support, such as maintaining family back home, paying for healthcare, or supporting education.
This has direct implications for NRIs (Non-Resident Indians) and other immigrant communities who regularly use traditional remittance services to support loved ones in their home countries. If passed, the bill could increase the cost of sending money abroad for millions of U.S.-based families.
However, there’s a clear distinction between personal remittances and investment-related transfers. Indian residents who invest in U.S. stocks through legitimate brokerage platforms should not be affected. Here’s why:
- Investment proceeds are not remittances: The funds involved in purchasing or redeeming U.S. stocks are typically routed through brokerage accounts and do not qualify as “remittance transfers” under the EFTA definition.
- Purpose matters: The EFTA focuses on transfers made primarily for personal, family, or household purposes — not financial or commercial transactions.
No explicit inclusion of investment transfers: The bill’s language does not currently mention capital gains repatriation or fund transfers related to portfolio investment, which suggests these transactions lie outside the intended scope of the proposed excise tax.
Important Caveats & What’s Next: An Evolving Landscape
While the immediate impact on your investment withdrawals seems minimal, it’s vital to keep a few things in mind:
- Still Not Law: This bill has been passed by the US House of Representatives (on May 22, 2025), but it is not yet law. It now heads to the US Senate for consideration. If the Senate passes it, it would then need to be signed by the President before it comes into effect. The final version could still see changes, and there’s considerable debate and opposition to various aspects of the bill in the Senate.
- Impact on NRIs in the US: The bill will significantly affect Non-Resident Indians (NRIs) and other foreign nationals living in the US who regularly send money back home for family support. They will likely bear the brunt of this 3.5% tax.
- Tighter Compliance: The bill also includes stricter compliance requirements for money transfer companies, such as reporting transfers over $5,000 in a single day. This could lead to increased scrutiny and potentially longer processing times for remittances.
Your US Investments and Indian Taxation: A Quick Recap
Regardless of this new bill, it’s always important to remember the existing tax framework for Indian investors in US stocks:
- Double Taxation Avoidance Agreement (DTAA): India and the US have a DTAA that prevents you from being taxed twice on the same income.
- Capital Gains: Long-term capital gains are taxed at a lower rate in India, while short-term gains are taxed at your ordinary income slab rates.
- Dividends: Dividends from US stocks typically face a 25% withholding tax in the US. However, you can claim this as a tax credit in India under the DTAA.
- LRS and TCS: Under India’s Liberalised Remittance Scheme (LRS), you can remit up to $250,000 per financial year for international investments. A 20% Tax Collected at Source (TCS) is applicable on remittances exceeding ₹10 lakh in a financial year, which can be adjusted against your final tax liability.
Vested Finance: Your Partner in Global Investing
At Vested Finance, we are committed to providing you with clear and timely information about your US investments. This is an ongoing story, and we will continue to monitor the progress of the “One Big, Beautiful Bill” through the US Senate and any other legislative changes that could impact your investment journey. We’ll provide updates as the situation evolves.
For personalized advice on your tax situation, we always recommend consulting with a qualified cross-border tax advisor.
Keep investing, keep diversifying, and let Vested Finance empower your global portfolio!
