According to latest data by 1Lattice, the outward remittances from India has witnessed a downfall of approximately 14 per cent, month on month in November 2023. For the past 3 years, overseas travel and leisure has had the highest share in outward remittances from India.
The month of November has recorded outward remittances worth USD 1.9 billion compared to 2.2 billion in October, with travel holding the majority share of 63 per cent, followed by education of 11 per cent, family maintenance of 11 per cent, gifts of 10 per cent and investment in equity/debt holding a 2 per cent share, the data highlighted.
Forex remittances had averaged over USD 3 billion a month between April-Sept 2023 before the increased tax collection at source (TCS) came into effect in October.
Outward remittance towards investment on debt/equity witnessed a significant decrease of about 51 per cent m-o-m, in November 2023, in comparison 60 per cent decrease in October, 2023. After international travel, Indians spent most on overseas education, followed by maintenance of close relatives, and gifts.
The Indian government had recently raised the tax collection at source (TCS) rate on foreign remittances under the Liberalised Remittance Scheme (LRS) from 5 percent to 20 percent, which has been effective since October 1, 2023.
In the first half of FY24, money sent abroad by Indians under the Liberalised Remittance Scheme (LRS) hit a record high of USD 18.34 billion.
The introduction of the TCS saw remittances drop sharply from nearly USD 3.5 billion in Sept to about 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 month-on-month fall was due to a decline in funds sent for maintenance of close relatives.
The Liberalised Remittance Scheme (LRS) allows every Indian to send up to USD 250,000 abroad annually.
In the nine-month period between April and December (FY23), remittances under this scheme have touched USD 19.35 billion, which is almost equal to the total amount remitted under this scheme in the whole of FY22.
Outward remittances recorded in FY20 was 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, said the 1Lattice data.
