Frequently Asked Questions about Foreign Currency Non-Resident (FCNR) Accounts?

Every year, billions of dollars flow from the US to families abroad through remittances, lifelines that support households and fuel economies around the world.But in 2025, a major change could be on the horizon. The US government is proposing a new tax on these international money transfers, a move that may significantly impact how immigrants and non-citizens send money home. While the tax aims to increase federal revenue, it also raises crucial questions about financial fairness, access, and the cost of supporting loved ones overseas.This article breaks down what the proposed tax means, who it affects, and how it could reshape your money transfers, all in clear, straightforward terms to help you stay informed and prepared.What Is Government Remittance?Traditionally, government remittances refers to payments made directly to government bodies, such as taxes, levies, or regulatory fees. These are routine transactions between individuals or businesses and the state.But in the context of this new proposal, the definition shifts. The term now points to a government-imposed tax on personal funds sent overseas, essentially turning part of your money transfer into a government remittance payable. In short, the remittance you send to family or partners abroad could include a small portion collected as a fee by the US government.Understanding this shift in meaning is key. This isn’t about traditional taxation—it’s about adding a cost to something many people do regularly: sending money home. Let’s now explore what this proposed 2025 remittance tax looks like and who might be affected.Details of the Proposed 2025 Remittance Tax Building upon our earlier discussion of the evolving definition of government remittances, let's delve into the specifics of the proposed 2025 remittance tax.The proposed legislation, known as the “One Big Beautiful Bill Act,” seeks to impose a new tax on international money transfers conducted by non-citizens residing in the United States. This proposal has sparked considerable discussion as it could impact millions of immigrants who regularly send money to their families abroad.Tax Rate on RemittancesThe bill introduces a 3.5% tax on funds transferred internationally by individuals who are not US citizens. This tax applies to transfers made through banks, licensed money transfer operators, and other official channels. The tax would be collected at the point of transfer, making it a mandatory fee payable to the government on each outgoing remittance.Who Will Be AffectedThis tax will impact a wide range of non-citizens who send money overseas. Some of the key groups include:People with green cardsHolders of work or study visasTemporary residents living in the USLawful permanent residentsIn short, anyone who is not a US citizen but regularly sends remittances abroad may see increased costs.Purpose Behind the ProposalThe primary goals of this legislation are twofold:To increase federal revenue by taxing a previously untaxed source of income flow.To discourage illegal immigration by imposing a financial disincentive on sending money abroad without a legal status.Legislative Progress and What Comes NextThe bill has passed the House of Representatives and now awaits Senate approval, with a tentative vote expected by July 4, 2025. If passed and signed into law, the remittance tax could come into effect starting January 2026. While not yet law, this swift progress reflects growing legislative interest in regulating remittance flows and increasing federal revenue.What This Means for YouIf this tax becomes law, sending money abroad could become more costly for many non-citizens. However, remember that transferring money will remain a straightforward process. Using trusted remittance services and tools like CompareRemit’s exchange rate calculator can help you find the best value and keep costs as low as possible.Why Is This Proposal Controversial?The proposed remittance tax has raised concerns, especially among low-income immigrant families who depend heavily on sending money back home. For many, even a small additional cost can create a significant financial burden. There are also worries about potential double taxation, where the same money might be taxed both in the US and again in the recipient’s country. Legal experts have flagged possible challenges to the bill, questioning its fairness and implementation.Another key concern is that this tax might push some senders toward informal or unregulated money transfer methods. These unofficial channels can be risky and less transparent, increasing the chance of fraud or delayed payments. While the government aims to regulate remittances and increase revenue, the unintended consequences could complicate matters for those who rely on these transfers most.Countries Most Affected by the TaxThe United States is one of the largest sources of remittances globally, sending billions of dollars annually to countries such as India, Mexico, the Philippines, Nigeria, and others. These nations rely heavily on financial support from family members abroad to sustain their local economies and households. If this tax is enacted, it could lead to a reduction in the amount of money flowing into these countries. This impact would be felt not just by families but also by businesses and communities that depend on remittance income. Keeping track of these changes and using comparison tools like CompareRemit can help you find the most cost-effective way to send money and reduce fees.What This Could Mean for the US and Global EconomyIf the remittance tax proposal becomes law, its ripple effects could stretch well beyond US borders. One immediate concern is a possible dip in formal remittance volumes. When official channels become more expensive, many senders may turn to black-market or unregulated methods to avoid additional charges, posing new risks and reducing government oversight.Developing nations that heavily rely on US remittances, like Mexico, India, and the Philippines, may face financial slowdowns due to shrinking inflows. These funds often support basic needs, education, and healthcare in recipient countries.Additionally, there’s potential for diplomatic friction. Governments of affected nations may raise concerns or negotiate exemptions, especially if they see this policy as unjust or harmful to their citizens working legally in the US. Economically and politically, the world will be watching closely as this proposal unfolds.Looking Ahead: What This Means for Everyday SendersWhether you're a student, worker, or temporary resident, this proposal could directly impact how you support loved ones back home. As the 2025 remittance tax moves through the US legislative process, it has sparked an important conversation around financial fairness, immigration, and global money movement.Regardless of whether the tax becomes law, the demand for secure, affordable, and transparent remittance solutions will only continue to rise. That’s why it’s essential to stay updated and choose services that offer not only competitive rates but also a smooth, hassle-free experience.As lawmakers debate the future of this policy, planning ahead can help safeguard your finances. Use trusted platforms like CompareRemit to find the best exchange rates and minimise fees, because every dollar you send home truly matters.Frequently Asked Questions (FAQs)Q1. Will the remittance tax apply to all US residents or only specific groups?No, the proposed tax targets non-citizens sending money abroad. US citizens would likely be exempt. However, individuals on work visas, student visas, and green card holders could be impacted. The tax is designed to apply selectively, focusing on non-citizen outbound remittance flows.Q2. Are there any exemptions or thresholds under consideration for small remittances?As of now, the proposal does not mention any minimum transfer threshold or exemptions for small amounts. Even small remittances may be taxed at the flat rate if the law passes, which could disproportionately affect low-income senders. However, details could change during Senate discussions.Q3. Can businesses or employers also be taxed under this proposal when sending money abroad?No, the bill is focused on individual remittance transfers, not business transactions. Corporate or employer-led international payments (e.g., vendor payments, payroll for overseas staff) aren’t included in the current draft of the proposal.Q4. Could this tax affect family sponsorship or support applications for immigration?Not directly. The remittance tax is financial, not immigration-related. However, if it limits the ability of sponsors to show financial support for family members, it might influence eligibility in cases where proof of financial capacity is required.Q5. How might this tax affect the cost comparison between different remittance services?The new tax could make some transfer options more expensive overall, especially those operating legally. This might increase demand for services with lower fees or better exchange rates, making tools like CompareRemit essential for finding the best deals.

The Indian Rupee recently experienced a sharp decline amid escalating geopolitical tensions with Pakistan. The latest conflict between the two nations in May 2025 has not only heightened regional insecurity but also rattled financial markets, pushing the rupee to its weakest level in over a year.While you may be miles away from the conflict, its economic ripples can affect your money transfers home. In this guide, you will learn why the rupee is falling, what it means for your remittance value, and how to get the most out of every dollar you send.Why Is the Indian Rupee Falling?The Indian Rupee’s recent fall is the result of a complex mix of global and domestic factors, intensified by the current geopolitical tensions between India and Pakistan. Understanding these drivers helps explain why the currency has weakened sharply in 2025.1. Geopolitical Tensions with PakistanThe immediate trigger for the rupee’s sharp decline has been the escalating conflict between India and Pakistan. This has heightened uncertainty and risk aversion among investors. This geopolitical instability prompts capital flight to safer assets like the US dollar, weakening the rupee significantly.2. Strengthening the US Dollar and Global Monetary PolicyThe US Federal Reserve’s aggressive interest rate hikes to combat inflation have made the US dollar more attractive globally. The dollar index recently surged above 90, reflecting strong demand for the greenback. This has led to capital outflows from emerging markets, including India, as investors seek higher returns and safety in the US dollar. The stronger dollar puts downward pressure on the rupee, which is priced against it.3. Rising Crude Oil Prices and Import CostsIndia is a major importer of crude oil, and all oil transactions are conducted in US dollars. Rising global oil prices increase India’s import bill, requiring more dollars to pay for these imports. This higher demand for USD further weakens the rupee. The combination of geopolitical tensions and rising oil prices compounds the pressure on the Indian Rupee.4. Widening Trade Deficit and Slower Economic GrowthIndia’s trade deficit has widened due to higher imports outpacing exports, leading to increased demand for USD. Additionally, slower GDP growth projections in key sectors have dampened investor confidence. This economic slowdown reduces foreign investment inflows, further weakening the rupee.5. Foreign Capital Outflows and Investor SentimentForeign Institutional Investors (FIIs) have been withdrawing funds from Indian equity and debt markets amid global uncertainties and domestic challenges. This capital outflow involves selling Indian assets and converting rupees into dollars, thereby increasing demand for the USD and weakening the rupee. Recent months have seen significant net outflows contributing to the rupee’s depreciation.6. Structural ChallengesIndia’s dependence on energy imports, weak export growth, and difficulties in attracting long-term foreign investment add to the rupee’s vulnerability. These structural issues limit foreign currency inflows and increase the economy’s exposure to external shocks, making it harder for the rupee to stabilize.RBI’s InterventionThe Reserve Bank of India (RBI) stepped in quickly to control the damage. It sold dollars in the open market to prevent excessive depreciation and managed short-term liquidity to ease panic. Despite the intervention, the market remained jittery.Other economic impactsForeign exchange reserves: India’s forex reserves dipped as the RBI used them to stabilize the rupee.Trade tensions: India halted trade operations with Pakistan, impacting cross-border trade, especially in the textile and agricultural sectors.Investment sentiment: The conflict dampened investor confidence, slowing foreign portfolio investment (FPI) inflows.Impact on Remittances: What This Means for YouIf you are sending money to India, this drop in the rupee might actually work in your favor—at least temporarily.Higher INR value per USD: With the Indian rupee falling against the dollar, every dollar you send could convert to more rupees. For example, if the exchange rate shifts from ₹83 to ₹85 per USD, your $1,000 transfer could now give your family ₹2,000 more than before.But watch for hidden fees: While a favorable exchange rate sounds great, don’t overlook the fees. Some providers might offer high rates but charge hefty transfer fees or markup the rate. Always check the itemized bill before sending money.Using a money transfer comparison tool like CompareRemit can help you avoid such pitfalls and find the most cost-effective option.Should You Send Money Now or Wait?Here are a few things to consider when deciding the best time to transfer funds:Volatility is high: Currency fluctuations can be unpredictable during geopolitical tensions. What looks like a good deal today could shift tomorrow.Short-term opportunities: If the rupee is dropping due to temporary events, you might benefit from making a transfer now before it recovers.Long-term perspective: If tensions persist and the rupee continues to fall, future transfers may yield even more INR. But this involves speculation and risk.To make informed decisions, you can use CompareRemit’s exchange rate alert tool to get real-time updates.What’s Next for the Rupee?The rupee may remain under pressure in the short term. Analysts predict that continued geopolitical instability, combined with global inflation trends and US interest rate policies, will play a role in determining its trajectory.For people sending money to India, now is a crucial time to monitor exchange rates closely. With increased volatility, small timing decisions can have a big impact on how much your recipient actually receives.How to Maximize Your Transfers Amid Currency FluctuationsWhether the rupee is rising or falling, your goal remains the same: get the best value. Here are some tips:Compare multiple providers: Different companies offer different exchange rates and fees. Instead of guessing, use a real-time comparison tool to view top-rated providers side-by-side.Avoid flat fees when possible: Some services charge a flat fee that can eat into your transfer, especially smaller ones. Look for fee-free or percentage-based pricing.Use exchange rate alerts: Let the technology work for you. Set up alerts so you are notified when rates hit your preferred value.Send in larger amounts, less frequently: If your provider charges per transaction, sending larger amounts can reduce total costs.Stay Ahead and Stay SmartWith the Indian rupee falling amid rising tensions with Pakistan, every decision you make about when and how to send money matters more than ever. Don’t let uncertainty get in the way of supporting your loved ones.Use CompareRemit to compare top money transfer providers, track exchange rates, and make sure your dollars go further.Frequently Asked Questions (FAQs)Q: How much did the rupee fall?It dropped by 1.03% on May 8, 2025, closing at ₹85.79 per USD. It was the steepest single-day fall since February 2023.Q: Will the rupee recover soon?If tensions subside and macroeconomic indicators remain stable, the rupee may gradually recover. But short-term fluctuations are expected.Q: Is a falling rupee good for sending money to India?In the short term, yes. A weaker rupee means your US dollars convert into more rupees. However, the value you get also depends on the fees and rates offered by remittance providers.Q: How does a weaker rupee affect Non-Resident Indians (NRIs) sending money to India?A depreciated rupee means that NRIs get more Indian currency for each unit of foreign currency sent. This can be beneficial for remittances, as recipients in India receive more funds.Q: How can I get the best exchange rates when sending money to India during such times?To ensure you get the most favorable rates, use platforms like CompareRemit to compare real-time exchange rates, transfer fees, and transfer speeds across various remittance providers. This helps in making informed decisions and maximizing the value of your remittances.

Have you ever paid any bill online, sent money through your mobile banking app, or used your debit/credit card at checkout? If yes, you have used EFT—whether you know it or not.If you are an immigrant, expat, or a small business owner, understanding what an EFT is and how it works will help you save a lot of time and money, particularly when you are sending money overseas.In this guide, you will learn the meaning of EFT, the working of various types of EFT, its benefits and drawbacks, and how to choose the right service for your requirements.What Is an EFT?EFT, short for Electronic Funds Transfer, is a method of digitally transferring money between accounts—sometimes within the same bank, sometimes between two different financial institutions. It is a secure and fast method, and doesn’t require cash or paper checks.How Does an EFT Work?EFT is just a method of moving money digitally. Whether you are sending money from one account to another, paying for online shopping, or giving out employees’ salaries, your bank uses the electronic system to process the transaction.The key players involved in an electronic funds transfer are as follows:The sender: The sender who initiates the transactionThe receiver: The person or the business that is receiving the moneyBanks or payment processors: They move the money between accounts.EFT networks: These comprise systems like SWIFT, ACH, or card networks such as MasterCard and Visa.There is no involvement of physical cash here. The entire process of transferring funds happens through computers and secure protocols.Types of EFT PaymentsThere are various types of electronic funds transfer methods. Let’s break down the top five types, so that you can make an informed decision on which is the best for your needs.1: ACH transfersACH stands for Automated Clearing House. Mostly used in the United States, it is the perfect method for business invoicing, payroll, and recurring bill payments. It takes 1-2 days for the transfer, and the fee is usually free or very low.2: Wire transfersWire transfers are best for large amounts or urgent transactions, especially overseas. Domestic wires are completed within the same day, whereas international wires may take up to 5 business days, depending on the currency and the bank. It can be expensive due to the sender or receiver fees and intermediary bank charges.3: Debit and credit card paymentsEvery time you tap, swipe, or enter your card details online for payment, you are making an electronic funds transfer. Cards are used for everyday shopping and online transactions. It involves the MasterCard and Visa networks. The risk of potential fraud also exists with cards, so always keep your card details secure.4: Mobile wallets and payments appsThere are various apps built for transfer, such as Google Pay, Apple Pay, PayPal, and Venmo. These apps allow store payments and instant peer-to-peer transfers. They are very easy to use, convenient, and quick. The only limitations are geography and the amount transfer limit.5: ATM transfersElectronic funds transfer also involves using your debit or credit card to transfer or withdraw money through bank ATMs. Some banks charge an ATM withdrawal or transfer fee if you are using a card from another bank.EFT vs. Online Money Transfer Services (like Wise or Remitly)When you think of sending money, especially internationally, you must often think of companies like Wise, Remitly, or Western Union. These are money transfer services, not the same as EFTs, although they often use EFTs to move money in the background.Let’s understand the difference.FeatureEFT (Electronic Funds Transfer)Online Service (like Wise or Remitly)DefinitionA digital method to move money between bank accountsPlatforms built specifically for sending money, often internationallyUse casePayroll, paying bills, and bank-to-bank transfersSending money to family/friends abroad, business transfersTransfer modeUses ACH, SWIFT, or card networksUses EFTs, but adds extra services and layersSpeed and feesDepends on type (ACH: 1–2 days, Wire: Same day)Often faster, but may include service fees and markupsBest forDomestic transfers, direct bank-to-bank paymentsPersonal or business transfers with added featuresIf you are wondering which is the ideal fit for you, then:Use EFTs when you are transferring between bank accounts directly or setting up recurring domestic payments (like rent or payroll).Use money transfer services like Wise, Remitly, etc. when you want a more user-friendly experience for international transfers, especially if the recipient does not have a bank account or you want competitive exchange rates.How Long Does an EFT Take?The amount of time taken for electronic funds transfer depends on the type of EFT.Type of EFTSpeedACH1-2 business daysBank wire transferSame day or next dayDebit card or credit card2-5 business daysMobile wallets and payment appsInstant or near instantATM transfersImmediate authorizationTo find out about the fastest and most cost-efficient international money transfer methods, check out CompareRemit’s rate comparison tool.What Does an EFT Cost?While EFTS are very cost-efficient, the fees vary based on the method or the provider. The fees for ACH transfers are usually free or a nominal fee. Wire transfer can cost $15 - $50, depending on the bank and country or recipient. Cards and wallets may include currency conversion costs for international use. Always double-check hidden fees, exchange rates, or delays before finalizing your transfer.Benefits of EFT PaymentsHere are the reasons for you to consider EFT payments:Affordable: No middlemen, printing, or postage involved.Speed: You can send money anytime, anywhere.Security: It is regulated, trackable, and encrypted.Great for recurring bills: It is perfect for payroll and recurring bills. Set it and forget it.Paperless: There is no requirement for any checks or physical cash.Drawbacks of EFT PaymentsEFT payments have some downsides as well. Here's what you should be cautious about:Reversal: If you have sent money mistakenly to someone, it may be lost. Reversals are not at all easy, especially with bank wire transfers.Frauds: Electronic funds transfers are still vulnerable to potential phishing and identity theft.Fees on international transfer: Banks and traditional wire transfers might include many hidden charges.Pro tip: To avoid risks, always use a comparison tool and verified platforms before sending the money.What is the Electronic Funds Transfer Act?The Electronic Funds Transfer Act was passed in 1978. It protects the United States’ consumers making EFT transactions. It limits the liability if you quickly report when your card is stolen or lost. It gives you the right to dispute any unauthorized charges. It also requires the banks to show how EFTs work and what your rights are.Understanding your rights is vital, especially if you are transferring a large amount of money overseas or running a business.Compare and Choose SmartElectronic Funds Transfer is here to stay, and they have made moving money globally without physical cash or paper checks easier than ever. But with so many options available today, choosing the right service to transfer money overseas to save time and money can be difficult.Whether you are transferring money to your family, making a business payment, or managing funds internationally, CompareRemit’s exchange rate calculator tools and comparison engine can help you save a lot of time and money, enabling you to make smart decisions.Frequently Asked Questions (FAQs)Q: What is the difference between an EFT and an ACH?An EFT (Electronic Funds Transfer) is a broad term for any electronic movement of money, while an ACH (Automated Clearing House) payment is a specific type of EFT that uses the ACH network. Essentially, all ACH payments are EFTs, but not all EFTs are ACH payments.Q: What is the difference between RTGS and EFT?RTGS (Real-Time Gross Settlement) enables the immediate, individual transfer of high-value funds, while EFT (Electronic Funds Transfer) is a broader term, which can include various methods of electronic transfer with different processing speeds. Q: Is EFT the same as Swift?No, EFT (Electronic Funds Transfer) and SWIFT are not the same. EFT is a broad term for any electronic movement of money, while SWIFT is a messaging network used by financial institutions to send instructions for international money transfers.Q: Is Wise or Remitly an EFT?No, Wise and Remitly are not EFTs themselves—they are money transfer services that use EFT methods (like ACH or wire) to move your money. These platforms often offer faster delivery, currency conversion, and added services for sending money internationally.Q: What is the difference between EFT and ACH?EFT is a broad term for any digital money transfer—ACH, wire, card, or mobile payments. ACH is a type of EFT that uses the ACH network, mainly for U.S.-based direct deposits and bill payments. All ACH transfers are EFTs, but not all EFTs are ACH.