Overseas remittances by Indians under LRS were down 29% in February to $1,964.21 mn: Here’s why

Remittances for ‘travel and studies abroad’ declined in the wake of the sharp fall in students going abroad.

As reported by The Indian Express recently, for the first time in four years, the number of Indian students heading to foreign universities has simultaneously declined across the top three destination countries — Canada, the United States and the UK. The data shows a sharp decline of at least 25 per cent in Indian students receiving study permits across these key destinations in 2024.

Moreover, according to travel industry sources, a good number of people dropped or postponed their travel plans since the global economy and markets faced volatile movements during the period.

RBI data shows that remittances for investment in equity and debt spurted to $173.84 million in February from $104.98 million in the previous month.

The Union Budget in February 2025 increased the threshold for collecting Tax Collected at Source (TCS) on LRS transactions from Rs 7 lakh to

Rs 10 lakh. This change was expected to benefit the travel and foreign exchange sectors, providing a boost to outbound tourism, education and the airline sectors.

Under the Liberalised Remittance Scheme, resident individuals, including minors, can freely remit up to $2,50,000 per financial year for permissible current or capital account transactions. These transactions include education, medical treatment abroad, purchase of property, and investments in foreign stocks.

Outward remittances under LRS were $31.735 billion during the year ended March 2024. Travel has emerged as the primary source of remittance outflow from India, accounting for over 50 per cent of total outflows at $17 billion from just 1.5 per cent share in FY14. Student remittances were $3.47 billion in FY24.

Tax collected at source is not an additional tax liability as people can claim a refund while filing income tax returns. As per the TCS rates under Liberalised Remittance Scheme proposed in the 2023-24 Budget, overseas tour package attracted TCS of 20 per cent from October 1, compared to 5 per cent. However, TCS will not be levied on credit card spending abroad.

LRS remittance processed by the bank as an Authorised Dealer towards air travel ticket booking or hotel booking by a resident individual customer would be subject to TCS of 20 per cent above Rs 10 lakh, according to a leading private bank.