In August 2024, Indians spent $3.2 billion overseas, with a significant focus on travel, overseas education, and family maintenance, as per Reserve Bank of India (RBI) data. Outbound travel alone contributed $2.01 billion, approaching the all-time high of $2.04 billion in July 2023, which occurred prior to the implementation of a 20% tax collection at source (TCS) on foreign remittances in October 2023.
Despite the introduction of TCS, forex spending has gradually recovered after an initial drop. In fact, August’s travel expenditures surpassed the FY24 monthly average of $1.4 billion, and spending on overseas education stood at $416 million, marking its highest point since January 2024. However, overall remittances in August 2024 declined by 5% compared to the $3.3 billion spent in August 2023.
According to forex dealers, while remittances for education have stabilized, travel demand remains robust, especially with the holiday season approaching. The 20% TCS rate only applies to remittances exceeding ₹7 lakh per year, minimizing its impact on many travelers. An increase in independent travel to visa-free or simplified visa destinations in Asia has also contributed to the surge in travel-related spending.
August’s travel expenditures were 25% higher than July's $1.6 billion and well above the $1.2 billion average for the first quarter of the fiscal year.
