{"id":44119,"date":"2025-05-26T21:14:29","date_gmt":"2025-05-26T15:44:29","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=44119"},"modified":"2025-05-26T21:14:43","modified_gmt":"2025-05-26T15:44:43","slug":"india-remittances-drop-lrs","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/26-05-2025\/india-remittances-drop-lrs","title":{"rendered":"India&#8217;s Outward remittances Decreases under Liberalised Remittance Scheme"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/ Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s outward remittances under the Liberalised Remittance Scheme (LRS) moderated by <strong>6.85 percent <\/strong>year-on-year (YoY) to<strong> $29.56 billion in FY25<\/strong>, after reaching an all-time high of <strong>$31.73 billion in FY24.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is Outward Remittance?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Outward remittance refers to the <strong>transfer of money in foreign currency <\/strong>by a resident of India to a person or entity outside India, for purposes such as education, travel, medical treatment, investment, or gifting.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>What is the Liberalised Remittance Scheme (LRS)?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>LRS was introduced in <strong>2004<\/strong> by the <strong>Reserve Bank of India (RBI).<\/strong><\/li>\n\n\n\n<li>It allows resident individuals (including minors) to remit up to <strong>$250,000 per financial year <\/strong>for permissible current or capital account transactions.<\/li>\n\n\n\n<li>Initially launched with a $25,000 limit, later increased to current levels.<\/li>\n\n\n\n<li>Remittances can be made for;\n<ul class=\"wp-block-list\">\n<li>Education and studies abroad,<\/li>\n\n\n\n<li>Travel and tourism,<\/li>\n\n\n\n<li>Medical treatment abroad,<\/li>\n\n\n\n<li>Purchase of property,\u00a0<\/li>\n\n\n\n<li>Investment in foreign securities or businesses.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>LRS is governed under the <strong>Foreign Exchange Management Act (FEMA), 1999.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Key Trends in FY25<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Travel Remittances <\/strong>emerged as the largest component, accounting for <strong>$16.96 billion,<\/strong> or over <strong>57%<\/strong> of total outflows.\n<ul class=\"wp-block-list\">\n<li>It indicates a growing preference for international travel among Indian residents despite a marginal dip from FY24.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Education Remittances<\/strong> declined 16% year-on-year, from $3.48 billion in FY24 to <strong>$2.92 billion in FY25.<\/strong><\/li>\n\n\n\n<li><strong>Investment Abroad:<\/strong> The funds remitted by Indians to invest in foreign equity and debt rose by 12.51%, reaching <strong>$1.699 billion in FY25<\/strong> compared to $1.51 billion in FY24.\n<ul class=\"wp-block-list\">\n<li>It reflects growing interest in diversifying portfolios and accessing global financial markets.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Policy Changes &amp; Tax Implications<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Union Budget 2025, raised the <strong>Tax Collected at Source (TCS)<\/strong> threshold on LRS transactions from<strong> \u20b97 lakh to \u20b910 lakh<\/strong>, providing relief to middle-class travellers and students.<\/li>\n\n\n\n<li><strong>TCS on LRS:<\/strong>\n<ul class=\"wp-block-list\">\n<li><strong>20% TCS<\/strong> applies to overseas tour packages above <strong>\u20b910 lakh.<\/strong><\/li>\n\n\n\n<li>TCS is not an extra tax, as it is adjustable against final tax liability.<\/li>\n\n\n\n<li><strong>Credit card <\/strong>spending abroad is <strong>excluded from TCS under LRS<\/strong>.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Why did student remittances decline?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Global Visa Restrictions: <\/strong>Major destinations like US, UK, Canada saw <strong>25\u201331% declines<\/strong> in Indian student visas.<\/li>\n\n\n\n<li><strong>Economic Uncertainty:<\/strong> Families postponed study and travel plans due to global financial volatility.<\/li>\n\n\n\n<li><strong>High Base Effect:<\/strong> Remittances were at peak levels in FY24, making a decline statistically likely.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Way Ahead<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India\u2019s outward remittances under LRS reflect both the aspirations of a growing middle class and the challenges posed by global economic dynamics.\u00a0<\/li>\n\n\n\n<li>While travel and investment continue to rise, falling student remittances highlight the importance of immigration policies abroad.\u00a0<\/li>\n\n\n\n<li>Policy responses, such as rationalising TCS and easing compliance, aim to strike a balance between enabling individual freedom and maintaining macroeconomic prudence.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.business-standard.com\/economy\/news\/outward-remittances-under-lrs-decline-6-85-percent-in-fy25-125052201550_1.html\" rel=\"nofollow noopener\" target=\"_blank\"><strong>BS<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">India\u2019s outward remittances under the Liberalised Remittance Scheme (LRS) moderated by 6.85 percent year-on-year (YoY) to $29.56 billion in FY25, after reaching an all-time high of $31.73 billion in FY24.<\/li>\n<p><\/p>\n<h3><strong>What is Outward Remittance?<\/strong><\/h3>\n<li class=\"ms-5\">Outward remittance refers to the transfer of money in foreign currency by a resident of India to a person or entity outside India, for purposes such as education, travel, medical treatment, investment, or gifting.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/26-05-2025\/india-remittances-drop-lrs\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-44119","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/44119","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=44119"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/44119\/revisions"}],"predecessor-version":[{"id":44138,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/44119\/revisions\/44138"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=44119"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=44119"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=44119"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}