Outward remittances under RBI's LRS drop 24% to $6.9 billion in Q1 FY25

Outward remittances under the Reserve Bank of India’s Liberalised Remittance Scheme (LRS) dropped 24.39 per cent year-on-year (Y-o-Y) to $6.9 billion in the April-June quarter of financial year 2024-25, from $9.1 billion in the year-ago period.

In June 2024, overall remittances fell around 44 per cent Y-o-Y to $2.18 billion amid a decline in remittances across categories.

In Q1 FY24, there was a surge in outward remittances due to the revision in norms for tax collection at source (TCS) on LRS. The Union Government introduced TCS on remittances under the scheme for all purposes except education and medical treatment, scheduled to be effective from July 1, 2023, which was later deferred to October 1, 2023.

The LRS scheme was introduced in 2004, permitting all resident individuals to remit up to $250,000 per financial year for any permissible current or capital account transaction, or a combination of both, free of charge. In its initial phase, the scheme was introduced with a limit of $25,000, which was gradually revised.

During the quarter, remittances declined across categories except for donations, medical treatment, and others.

In Q1 FY25, the largest segment—international travel—recorded a 6 per cent drop to $3.8 billion compared to $4.07 billion in the year-ago period. Similarly, remittances for the maintenance of close relatives dropped by 46 per cent Y-o-Y to $983.2 million.

Likewise, remittances under the ‘gift’ category dropped by nearly 41 per cent from last year to $811.9 million. Investments in equity and debt schemes also witnessed a drop to $318.02 million in the first quarter of FY25, compared to $503.73 million in the year-ago period. Remittances for deposits saw a steep decline of 61 per cent Y-o-Y to $164.7 million.

Spending by Indians on overseas education saw a drop of nearly 14 per cent to $596.08 million from $694.41 million in the same period last year.

On the other hand, remittances made for medical treatment rose by 43.5 per cent Y-o-Y to $24.46 million, whereas donations saw an uptick of 3.6 per cent to $4.29 million.