According to latest data from 1Lattice, the outward remittances from India witnessed an increase of about 9 percent, month on month in January 2024. During the past 3 years, foreign travel and leisure had the highest share in outward remittances from India.
The month of January recorded outward remittances worth USD 2.6 billion compared to USD 2.4 billion in December, USD 1.9 billion in November and USD 2.2 billion in October, with travel having the majority share of 59 percent, followed by education of 17 percent. , Family maintenance of 10 percent, gifts of 8 percent and investment in equity/debt holding a 2 percent share, the data highlighted.
During January, the amount spent by Indians on education increased from USD 0.3 billion in Dec’23 to USD 0.4 billion in Jan’24 registering about 68 percent growth month on month basis.
Forex remittances averaged more than USD 3 billion per month between April-September 2023 before the increased tax collection at source (TCS) came into force in October.
Outward remittance to investment in debt/equity witnessed a significant decline of about 41 percent mom, in January 2024, compared to a 146 percent growth in December 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.
According to latest data from the Reserve Bank of India, the amount remitted under LRS was $24.80 billion in the 9-month period ended December 2023, compared to $20.63 billion in the same period last year.
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.
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.