The US 1% Remittance Tax: How NRIs Sending Money for a Mumbai Flat Can Avoid It

Since 1 January 2026 the US charges 1% on cash-funded remittances. Bank and card transfers are exempt. What it means for NRIs paying for Mumbai property.

Aerial view of residential towers in Mumbai's suburbs on a hazy morning

If you live in the US and send money home for a flat, a society bill or a family member, you've probably heard about the new remittance tax. The good news: for most NRIs who pay the normal way, it doesn't apply at all.

What is the US remittance tax?

According to NRI Information (updated 27 September 2026):

It is a 1% federal excise tax on remittance transfers made on or after 1 January 2026.
The sender is liable; the remittance provider collects it and pays it to the IRS.
It applies only to transfers funded with cash, including money orders and cashier's cheques.

Which transfers are exempt?

Transfers funded from a US bank account.
Bank wires.
Transfers paid with a US-issued debit or credit card.

So if you transfer from your US bank account to your NRE or NRO account in India, the 1% shouldn't apply. If you hand cash over a counter to a money transfer shop, it will.

How much does 1% cost on a property payment?

On a Rs 50 lakh down payment, 1% is Rs 50,000. On a year of society maintenance and property tax of, say, Rs 1.5 lakh, it's Rs 1,500. Small amounts add up, and they're entirely avoidable by paying from a bank account.

Send money from your bank account, not over a counter. That one habit avoids the 1% and keeps a clean paper trail for India too.

A clean way to fund your Mumbai property from the US

Transfer from your US bank account to your NRE account for purchase payments. Money that comes in through NRE or as a foreign inward remittance matters later, when you want to repatriate sale proceeds.
Keep the inward remittance records your Indian bank provides for large transfers.
Pay builders, society and BMC from your Indian account, not through a relative's account. It keeps your records clean for tax and for any future sale.
Use the bank's records for your CA on both sides of the world.

What this means for you

NRIs buying in Mumbai: plan your down payment as bank transfers. Our NRI buying desk helps with the sequence of payments and TDS.
NRI owners paying running costs: society bills, BMC property tax and repairs can be paid from your NRO account.
Families receiving support: ask your relative to send from a bank account, not cash.

The TND app owner dashboard showing properties, occupancy and a financial snapshot — Owners we manage see expenses and statements in the TND app.

Frequently asked questions

Does the US remittance tax apply to bank transfers to India?

No. Transfers funded from a US bank account, bank wires and US-issued debit or credit cards are exempt. The 1% applies to cash-funded transfers.

When did the US remittance tax start?

It applies to transfers made on or after 1 January 2026.

Who pays the US remittance tax?

The sender is liable, and the remittance provider collects it and passes it to the IRS.

Related reading

Planning to buy or fund a flat from the US? Book a video call or WhatsApp me.

Warmly,
Yanik

General information, not tax advice. Check US tax questions with a US tax adviser.

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