According to latest data from 1Lattice, India’s outward remittances witnessed a decline of about 14 percent, month-on-month in November 2023. Over the past 3 years, foreign travel and leisure had the highest share in India’s outward remittances.
The month of November recorded outward remittances worth USD 1.9 billion compared to 2.2 billion in October, with travel accounting for the majority share of 63 percent, followed by education at 11 percent, family maintenance at 11 percent, gifts at 10 percent. and investment in equity/debt holding a 2 percent share, the data highlighted.
Forex remittances averaged more than USD 3 billion per month between April-September 2023 before the increased tax collection at source (TCS) came into effect in October.
Outward remittance to investment on debt/equity witnessed a significant decline of about 51 percent mom, in November 2023, compared to a 60 percent decline in October 2023. After international travel, Indians spent the most on foreign education, followed by maintenance of close . relatives, and gifts.
The Indian government recently raised the tax collection rate at source (TCS) on foreign remittances under the Liberalized Remittance System (LRS) from 5 percent to 20 percent, effective from October 1, 2023.
In the first half of FY24, money sent abroad by Indians under the Liberalized Remittance Scheme (LRS) reached a record high of USD 18.34 billion.
The introduction of the TCS saw remittances drop sharply from nearly USD 3.5 billion in September to around USD 2.2 billion in a month’s time.
The LRS allows resident Indians to transfer funds abroad without restrictions, up to a specified limit. This monthly drop was due to a decrease in funds sent for the maintenance of close relatives.
The Liberalized Remittance Scheme (LRS) allows every Indian to send up to USD 250,000 abroad every year.
In the nine-month period between April and December (FY23), remittances under this scheme touched USD 19.35 billion, which is almost equal to the total amount remitted under this scheme in the whole of FY22.
External remittances recorded in FY20 were USD 18 billion, in FY21 it was USD 12 billion and in FY22 it was a whopping USD 19 billion. In January and February 2023, the numbers recorded were USD 2.7 billion and USD 2.1 billion, 1Lattice data said.