Money & Banking

Indians gift more than invest overseas

Arvind Jayaram | Updated on November 15, 2017

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High net-worth individuals' tax planning unaffected by global economic woes

Indians gifted more overseas than they invested in the first eleven months of the past fiscal. This is a reversal of a trend in previous years, when the level of equity and debt investment exceeded the quantum of gifts made by affluent Indians.

Gifts made to overseas entities comprised the largest share of overseas remittance in the first eleven months of 2011-12. But the quantum of gifts recorded a slight increase of just 0.2 per cent vis-à-vis the previous year when Indians made gifts worth $213.6 million, indicating that tax planning by high net-worth individuals continued unabated amid global economic woes.

On the other hand, investments in equity and debt instruments overseas declined slightly by 10.6 per cent and made up for the second largest share in total overseas remittances, amounting to $192.7 million. This is likely to have been the fallout of sluggish stock markets overseas.

Overall, outward remittances by Indian individuals slackened in the period. While donations abroad increased, money spent on other expenses such as maintaining relatives, medical expenses and studies overseas decreased.

More traVel

Funds transferred abroad by individuals had touched an all-time high of $1,163 million in 2010-11. But this fell to $851 million between April 2011 and February. Indians remitted $1,016 million overseas in the corresponding period of 2010-11. Total outward remittances amounted to $983 million in 2009-10 and $808.1 million in 2008-09.

Despite depreciation of the rupee making travel abroad more expensive, Indians spent more on overseas sorties in April-February 2011-12. The total bill on Indians' overseas travels doubled to $33.1 million during the period. In contrast, the monies sent overseas for maintenance of close relatives registered a sharp 40 per cent decline to $140.8 million.

Outward remittances for purchase of immovable property overseas also fell 5.9 per cent to $54.1 million during the 11-month period. So did the amount of overseas deposits, by 18.3 per cent to $17.8 million.

Universities, hospitals

Indian universities and hospitals appear to be giving their overseas counterparts a run for their money. Spending on studies abroad also dipped by 25.1 per cent to $103.2 million, while bills on medical treatment dropped by 40 per cent to $3.32 million.

Indians also trimmed their budget on subscription to overseas journals, maintenance of investments abroad and credit-card payments in April-February 2011-12. Other miscellaneous expenses declined by 17.9 per cent to $90.9 million during the period.

Published on May 17, 2012

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