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Forex spends surge in December after 9-month low

Published:

MUMBAI:

Holiday season

travel rush saw

overseas remittances

jump to $2.4 billion in Dec 2023 from a nine-month low of $1.9 billion in Nov. Remittances in Dec were 16% higher than the $2 billion in the year-ago period despite widening the scope of tax collection at source (TCS) in the previous year’s Budget.
The highest remittance ever was recorded in June 2023, which saw a total outgo of $3,890 million after govt announced that TCS would come into force from July 1, 2023.

June also saw the highest remittance of $890 million for overseas education. The highest spending on overseas was in Aug 2023, when Indians spent over $2 billion on overseas jaunts.

Screenshot 2024-02-21 054800

The highest contribution to the increase in remittances in Dec came from foreign travel, where spending increased to $1,548 million from $1,180 million in Nov. Spending on education increased to $267 million in Dec 2023 from $207 million in Nov. “There are several factors that led to the increase in Dec. Besides the holiday travel during Dec, there was the student-related demand with many of them travelling during Dec for courses that start in Jan 2024,” said M Hariprasad, executive director, Ebixcash World Money.

“There was also an increase in remittances because Canada has doubled the General Investment Certificate requirement to CAD 20,635 from CAD 10,000, and many travellers rushed to book investments before Jan 2024,” he added.
In Nov, the total amount remitted abroad dropped to $1,878 million, marking a decline of $298 million in one month, which was the lowest since Feb 2022’s $1,823 million. The LRS scheme allows Indians to send up to $250,000 abroad annually.
A decline was observed across all categories in Nov, with the maximum drop coming from spending on foreign travel, followed by studies abroad. In Nov, the total spend on travel was $1.2 billion, nearly $188 million lower than the previous months. The average monthly spend on travel in FY24 before the imposition of tax in Nov was $1.5 billion. The remittance for studies dropped by $61 million to $207 million in Nov 2023 compared to $269 million in Oct 2023. The average remittance for studies before the TCS was $306 million.

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