There may be bad news from the US for India’s IT industry. A new bill called the ‘Halting International Relocation of Employment Act’ (HIRE Act) has been introduced in the US Senate. The bill proposes to impose a 25 percent tax on certain se
Services provided outside the US.
Since Indian IT companies export more than half of the US’s software services, this tax could significantly increase their value. In 2024-25, India’s IT services exports to the US were about $225 billion.
US Politics and Employment Concerns
The bill has been introduced by Senator Bernie Moreno. He said that as companies hire cheap workers abroad, American youth are not getting jobs. He clearly stated that if companies give priority to foreign workers over American citizens, then they will have to pay the price in the form of taxes. This step is said to be taken towards providing jobs and a better future to the American middle class.
Key provisions of the bill
According to the rent law, a 25% tax will be imposed on fees, royalties, premiums or service charges paid to foreigners outside the United States. This tax will apply only to those services that directly or indirectly benefit American customers. If the service is partially provided in the United States and other countries, then only the American side will be taxed. The special thing is that American companies will not be able to deduct this tax from their income. In addition, a heavy penalty has been proposed for non-payment of tax, which will be increased from 0.5% to 50%.
Employment Fund and Future Challenges
According to the new bill, a special fund called the ‘Domestic Workforce Fund’ will also be created. It will collect money collected from taxes and penalties, which will be spent on workforce training, apprenticeships and employment schemes for unemployed people in the US. If this law is implemented, outsourcing services for India and other countries could become expensive after December 31, 2025. Experts believe that this could affect the competitiveness of India’s IT sector and companies may have to find new markets. Overall, this US move could prove to be a big setback for the Indian IT sector. The question is whether Indian companies are ready for the new situation or they will have to find new ways to reduce their dependence on the US market.
