'A 5% tax, a ₹30,000 crore problem for India': Fintech professional breaks down Trump’s hidden strategy

It may look like a tax tweak but it’s really a geopolitical squeeze.

Jugal Thakkar, a fintech professional, warns that Donald Trump’s proposal for a 5% tax on outbound US remittances isn’t just about revenue—it’s about deterrence, diplomacy, and dominance. In a recent LinkedIn post, Thakkar calls it “a ₹30,000 crore problem for India” masquerading as tax reform.

What’s at stake?
Trump’s proposed move, framed like India’s TDS on foreign transfers, serves multiple US objectives: it deters illegal immigration by making it harder for workers to send money back home, it acts as a pressure tool against countries that receive large amounts in remittances like India, the Philippines, Nepal, and Mexico, and it strengthens the US dollar by keeping more currency within the country.

Why India should care?
India received $32 billion in remittances from the US last year—accounting for 28% of its total inbound remittances. A 5% tax would divert $1.6 billion straight to the US Treasury.

But that’s just the immediate impact. The real damage could be a 10 to 15 percent drop in overall remittance volumes, resulting in a loss of $12 to $18 billion for India.

This isn’t just about macroeconomics. That money funds school fees, home loans, daily essentials. It keeps household consumption afloat and fuels local economies.

With a typical multiplier effect of 1.5 to 2 times, the total economic impact could exceed ₹30,000 crore.

A drop in dollar inflows would also strain the rupee. A slide of ₹1 to ₹1.5 per USD is likely, triggering costlier imports and higher inflation. The Reserve Bank of India would have to step in to soften the blow.

Thakkar frames this not as a routine policy proposal but a geopolitical stress test. A tactical tax today could redraw tomorrow’s remittance map—and India will be one of the first nations to feel the heat.