According to latest data by 1Lattice, the outward remittances from India has witnessed an increase of approximately 14 per cent, month on month in March 2024 after a 23 per cent dip in February. For the past 3 years, overseas travel and leisure has had the highest share in outward remittances from India.
The month of March has recorded outward remittances worth USD 2.3 billion compared to USD 2 billion in February, USD 2.6 billion in January, USD 2.4 billion in December 2023 and USD 1.9 billion in November, with travel holding the majority share of 44 per cent, followed by education of 9 per cent, family maintenance of 17 per cent, gifts of 14 per cent and investment in equity/debt holding a 10 per cent share, the data highlighted.
Remittances clocked a record high of USD 27.14 billion in FY23. According to latest data by RBI, remittances increased 16.91 per cent year-on-year from the previous high of USD 27.14 billion clocked in FY23. Indians remitted USD 29.43 billion abroad during the April-February period as compared to USD 24.18 billion in the same period of the previous year.
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 jump of about 66 per cent m-o-m, in March 2024, in comparison to 126 per cent jump in February and 41 per cent decline in January, 2024. 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.
According to latest data by the Reserve Bank of India, the amount remitted under LRS stood at USD 24.80 billion in the 9-month period ended in December 2023, compared to USD 20.63 billion in the same period last year.
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.
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, said the 1Lattice data.
