According to latest data by 1Lattice, the outward remittances from India has witnessed an uptick of approximately 9 per cent, month on month in January 2024. For the past 3 years, overseas travel and leisure has had the highest share in outward remittances from India.
The month of January has 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 holding the majority share of 59 per cent, followed by education of 17 per cent, family maintenance of 10 per cent, gifts of 8 per cent and investment in equity/debt holding a 2 per cent 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 recording approximately 68 per cent growth on a month on month basis.
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 decline of about 41 per cent m-o-m, in January 2024, in comparison 146 per cent growth in December, 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.
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. In January and February 2023, the numbers recorded were USD 2.7 billion and USD 2.1 billion, said the 1Lattice data.
