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Liberalised Remittance Scheme

The Liberalized Remittance Scheme (LRS) permits resident individuals, including minors, to remit up to USD 250,000 per financial year for allowable current and capital account transactions without RBI approval.

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Liberalised Remittance Scheme

Liberalised Remittance Scheme

The Liberalized Remittance Scheme (LRS) was introduced to allow all resident individuals, including minors, to remit funds outside India for permissible current and capital account transactions. Under this scheme, individuals can remit up to USD 250,000 per financial year (April to March) without needing permission from the Reserve Bank of India (RBI).

 

Remittance Limits and Adjustments

If an individual has already utilized part of the USD 250,000 limit, their available amount for the remainder of the financial year will be reduced by the amount already remitted. This means that any prior remittances will directly affect the current limit.

Permissible Capital Account Transactions

  • Opening foreign currency accounts abroad with banks.
  • Purchasing property in foreign countries.
  • Making investments overseas.
  • Setting up wholly-owned subsidiaries and joint ventures abroad.
  • Extending loans in Indian Rupees to non-resident Indians (NRIs) who qualify as relatives under the Companies Act, 2013.

Current Account Transactions

The LRS also covers several current account transactions, all within the USD 250,000 limit. Additional remittances beyond this limit will require prior approval from the RBI. Permissible current account transactions include:

  • Private visits to countries (excluding Nepal and Bhutan)
  • Gifts or donations
  • Employment abroad
  • Immigration purposes
  • Maintenance of close relatives living abroad
  • Business travel, including attending conferences or training sessions
  • Medical expenses incurred overseas
  • Educational expenses for studies abroad
  • Other permissible current account transactions

Exceptions

For specific situations, individuals may exceed the overall LRS limit:

  • Emigration-related expenses or those related to medical treatment or education abroad may allow for additional remittances if required by the destination country, medical institution, or educational institution.
  • Gifts in Indian Rupees to NRI relatives, as defined in the Companies Act, 2013, also fall under the LRS limit.

Remittances by Non-Individuals

Entities other than individuals, such as corporates and trusts, can make remittances for the following purposes:

  • Donations to educational institutions
  • Commissions to agents abroad for selling residential properties or commercial plots in India
  • Consultancy services
  • Reimbursement of pre-incorporation expenses

These remittances are subject to specific limits and conditions outlined under LRS, allowing up to USD 250,000 for current account transactions.

Restrictions

Certain transactions are not permissible under LRS, including:

  • Remittances for margins or margin calls to overseas exchanges or counterparties
  • Any transactions that violate FEMA regulations

Benefits of Understanding the LRS

Informed Decision-Making

Individuals can make better choices regarding their international investments and expenditures.

Maximized Opportunities

Understanding the permissible activities under LRS allows for strategic planning, such as investing in foreign properties or educational institutions.

Avoidance of Regulatory Issues

Knowledge of compliance requirements helps prevent unintentional violations, ensuring a smoother remittance experience.

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