MUMBAI: Indians spent $3.2 billion overseas in August 2024, with most of it on travel, overseas education and maintenance of relatives. After an initial dip following the introduction of tax collection at source last year, forex spending is on the rise, according to RBI data.
The dollar-spend was driven by outbound travel, which stood at $2.01 billion during the month.This is only a few million short of the all-time high of $2.04 billion Indians spent in July 2023 before the new TCS rate of 20 per cent tax came into force from October 1 that year. The spending on travel is much higher than the average spends of $1.4 billion for FY24. Studies abroad saw the second-highest spending at $416 million – the most Indians have spent on overseas education since Jan this year, when $446 million were remitted under the category. Remittances for education had touched an all-time high of $780 million in Aug 2021.
Overall, remittances under LRS at $3.2 billion are 5% lower than the $3.3 billion in August 2023. Forex dealers said that while there has been a moderation in money sent overseas for education, travel demand continues to be strong with booking for the forthcoming holidays. The TCS is not a major deterrent for most travellers as the threshold for 20% tax rate has been fixed at Rs 7 lakh per year for individuals. “Most of those going for overseas education are doing so with the objective of seeking employment. With many countries tightening work visa norms, the attraction for overseas education has come down,” a forex trader said.
With several Asian countries offering visa-free or simplified visa travel, a new category of independent travellers – who are not going through travel agencies – is emerging.
The Aug spending is 25 per cent more than the $1.6 billion spent in overseas travel in July and the $1.2 billion average for the first quarter.