In the budget for 2023-24, noteworthy modifications were announced with respect to the Tax Collection at Source (TCS) system applicable to payments made under LRS and packages for overseas tour programs. Data indicates that the outward remittances spiked between June & September 2023 before the new TCS rules were implemented from October 2023. The Liberalised Remittance Scheme or LRS is a regulatory framework introduced by the Reserve Bank of India (RBI) that allows resident individuals to remit a certain amount of money in a financial year for various capital account and current account transactions. That is, under the scheme, resident Indians are allowed to transfer funds abroad up to a specified limit, without the prior approval of RBI. The scheme was first introduced in 2004 and has undergone several revisions since then, based on the prevailing macro and micro economic conditions. The Scheme was originally introduced with a limit of USD 25,000. As of the last revision in 2015, the prescribed limit is USD 2,50,000 per financial year (April to March). This is roughly equivalent to a tad more than two crore Indian rupees. While there is no limit on the frequency of remittances under the scheme, the resident individual will not be eligible to make any further remittances under the scheme if the remittance limit is reached. In short, LRS has played a key role in making overseas expenses and investments simpler for resident Indians. The types of remittances made under the scheme include Deposits, Donations, Gifts, Investments in equity/debt, Maintenance of close relatives, Medical Treatment, Purchase of immovable property, Studies Abroad, and Travels, among others. Total outward remittances under LRS have been increasing consistently, except during COVID-19 outbreak According to RBI data sourced from Dataful, the total outward remittances under LRS have been increasing consistently. The growth is considerably higher in 2015-16 and 2016-17. In 2019-20, the total outward remittances under the scheme touched an all-time high of nearly 29,568 million USD. However, it dropped to less than half in 2020-21 due to the COVID-19 pandemic. Since then, the value has been improving. With one more quarter remaining in 2023-24, the total value is higher than that recorded before 2019-20 & in the pandemic years. Remittances for travel accounted for than half of the total remittances under LRS Remittances for travel alone accounted for more than 50% of the total remittances under LRS in 2022-23 and 2023-24. In terms of actual figures, the value has increased from 21 million USD in 2011-12 to 13,662 million USD in 2022-23. The remittances for this purpose have crossed the pre-pandemic levels. Though education (studies abroad) and maintenance of close relatives accounted for more than 20% each of the total until 2021-22, their share has dropped significantly in 2022-23 and 2023-24. The remittances for studies abroad are yet to recover from the impact of the pandemic. In 2022-23, the value was below that recorded in the pandemic year, despite the increasing number of students emigrating from India. Investment-related purposes, viz; purchase of immovable property, deposits, and investments in equity/debt together accounted for 31% of the remittances in 2011-12. However, their share has dropped to less than 10% since 2017-18. Investments in equity/debts rose 2.6-fold following the decline in the pandemic. Similarly, the remittances for purchasing immovable property have tripled since 2020-21 while that for deposits crossed the 1000 million USD mark in 2022-23. Meanwhile, the remittances under LRS for medical treatment increased from less than 2 million USD in 2011-12 to more than 55 million USD in 2022-23, the highest in the 12 years. Total remittances for gifts were more than 3000 million USD in 2022-23. Remittances for donations that peaked in 2019-20 dropped significantly post-pandemic and have been low since. New TCS rates are applicable for transactions under LRS since October 2023 In the budget for 2023-24, noteworthy modifications were announced concerning the Tax Collection at Source (TCS) system applicable to payments made under LRS and packages for overseas tour programs. Taking into consideration the comments and suggestions received, the government made suitable changes to the initial proposal. Since 01 October 2023, the amended rules have been implemented. Credit card transactions have not been included in LRS yet Further, the government had initially announced that payments using credit cards would be included under LRS. However, the inclusion has been postponed giving banks and card networks more time to implement required IT solutions, ensuring smoother integration.