For 3 Months After Demonetisation, Wealthy Indians Spent 500% More On Foreign Holidays

File photo: People showing demonetised notes outside the RBI Building/PTI Photo

New Delhi: Days after Prime Minister Narendra Modi had announced demonetisation of high value currency on November 8 last year, some of the wealthy Indians went on a spending spree abroad. Indians spent $246.6 million on overseas holidays in November 2016, up 581% from the same period a year ago.

According to a Moneycontrol news report, in December 2016 Indians spent $201 million travelling across the world, 517% more than December 2015. The trend continued in January 2017 with foreign travel spending of $217.8 million, 434% more than the corresponding period a year ago.

Interestingly, growth in overseas tourism related spending came down drastically in February. The Reserve Bank of India is yet to release data for such spending March onwards.

A fortnight before the first anniversary of demonetisation, these figures raise questions whether some wealthy Indians chose to blow away undisclosed assets worth crores of rupees to escape scrutiny in wake of demonetisation.

Tax officials are closely looking at data to zero in on those individuals whose declared income and spending on international travel mismatch.

Travel-related and other overseas remittances take place through RBI’s Liberalised Remittance Scheme (LRS) that allows people to spend up to $250,000 overseas in a year through legitimate financial instruments such as travellers’ cheques without specific approval.

Authorities are now scrutinising suspicious bank transactions that may have been used to remit money overseas through the LRS route after PM Modi’s surprise announcement last year.

Officials said data mined after November 8 has thrown up several tax evasion methods that the government will now crack down on.

In some instances, account holders were found to have deposited large sums and later converted these into foreign country travellers’ cheques. Records during November and December 2016 also show a spike in credit card bill payments in cash exceeding more than Rs 1 lakh in thousands of cases. Officials are now examining overseas spending pattern on these credit cards.