Indians spent an impressive $3.2 billion overseas in August 2024, with international travel and education leading the way, according to the latest data from the Reserve Bank of India (RBI). This significant expenditure highlights the growing demand for outbound travel and education, even in the face of new tax regulations aimed at curbing foreign remittances.
Despite the recent implementation of a 20% tax collection at source (TCS) on foreign transactions, Indians continue to spend heavily on travel, while overseas education remains a key priority for many families.
Travel Expenditure Hits New High
Outbound travel dominated overseas spending, accounting for $2.01 billion in August 2024. This figure is close to the record $2.04 billion spent in July 2023, just before the government introduced a 20% tax collection at source (TCS) on foreign remittances. While the TCS took effect in October 2023 and initially curbed spending, travel expenditures have since bounced back. In fact, the August 2024 travel spend significantly exceeded the fiscal year’s average of $1.4 billion, signaling the resilience of Indians’ demand for international travel.
Forex dealers note that much of this demand stems from upcoming holiday bookings. Although the new TCS rate applies only to remittances exceeding ₹7 lakh annually, many travelers are still opting for international vacations, particularly to visa-free or visa-simplified destinations in Asia.
Overseas Education Spending Rises
Spending on overseas education also contributed to the surge in remittances, totaling $416 million in August 2024—its highest level since January of the same year. Although education-related remittances were more significant in past years, peaking at $780 million in August 2021, the current numbers indicate that Indian students continue to prioritize international education despite higher taxes and stricter visa regulations.
According to a forex trader, “Most students pursuing education abroad do so with the aim of securing employment. However, as work visa policies tighten in many countries, the demand for overseas education has somewhat softened.”
Overall Decline In Remittances
While travel and education saw growth, overall remittances in August 2024 were down 5% compared to the previous year, when $3.3 billion was sent overseas. The decline could be attributed to a variety of factors, including the introduction of TCS, which has prompted many to reconsider how and when they send money abroad.
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