The Liberalised Remittance Scheme (LRS), introduced by the Reserve Bank of India (RBI), permits resident individuals in India to remit up to USD 250,000 per financial year for specified permissible transactions. These remittances may pertain to both current and capital account transactions, or a combination thereof, within the prescribed limit.
This article outlines the provisions applicable to non-trade current account transactions under the LRS.
Permissible Non-Trade Current Account Transactions
- Private Visits
Resident individuals may remit foreign exchange for private travel abroad (excluding travel to Nepal and Bhutan), subject to the overall LRS limit of USD 250,000 per financial year. - Gifts and Donations
Remittances may be made as gifts or donations to individuals, including Non-Resident Indians (NRIs) and Persons of Indian Origin (PIOs), provided they qualify as close relatives under applicable regulations. - Emigration
Residents intending to emigrate may remit foreign exchange up to the amount prescribed by the destination country or up to USD 250,000, whichever is lower. - Overseas Business Visits
Individuals undertaking business-related travel, including participation in seminars, conferences, specialized training, and related activities, are permitted to remit foreign exchange under LRS. - Medical Treatment Abroad
Foreign exchange may be remitted to meet expenses related to medical treatment overseas, including associated travel and hospitalization costs. - Studies Abroad
Remittances for educational expenses at overseas institutions, including tuition, accommodation, and other associated costs, are permissible under the scheme. - Other Personal Expenses
The LRS also permits remittances for family maintenance abroad, travel-related expenses, and other bona fide personal needs, as allowed by RBI guidelines.
Key Considerations for Remittances under LRS
- Annual Remittance Limit
The aggregate limit under LRS is USD 250,000 per individual, per financial year. - Documentation Requirements
Applicants must submit necessary documentation to the Authorised Dealer (AD) bank, including a valid passport, Permanent Account Number (PAN), and proof of address. - Prior Approval Requirement
Transactions exceeding the prescribed LRS limit or those falling outside the scope of the scheme require prior approval from the Reserve Bank of India. - Tax Collected at Source (TCS)
In 2025, the Tax Collected at Source (TCS) on remittances under the Liberalized Remittance Scheme (LRS) has been revised. A key change is the increased threshold for TCS applicability, now set at ₹10 lakh per financial year. - Role of Authorised Dealer Banks
AD Category-I banks are entrusted with the responsibility of facilitating LRS transactions and ensuring compliance with RBI regulations and reporting norms. - Non-LRS Transactions
Transactions that do not qualify under the LRS or exceed the permissible limit are governed by separate provisions and require explicit approval from RBI.
The list of non-current trade transactions are as under.
- Private visits,
- Remittance by tour operators / travel agents to overseas agents / principals / hotels,
- Business travel,
- Fee for participation in global conferences and specialized training,
- Remittance for participation in international events / competitions (towards training, sponsorship and prize money),
- Film shooting,
- Medical treatment abroad, [Both the patient and his/her attendant are separately eligible for the foreign exchange limit of USD 250000/- (or equivalent) each.]
- Disbursement of crew wages,
- Overseas education,
- Remittance under educational tie up arrangements with universities abroad,
- Remittance towards fees for examinations held in India and abroad and additional score sheets for GRE, TOEFL, etc.
- Employment and processing, assessment fees for overseas job applications,
- Emigration and emigration consultancy fees, [ This amount should only to meet the incidental expenses in the country of emigration. Further, this remittance should not for undertaking any capital account transactions such as overseas investment in government bonds; land; commercial enterprise; etc.]
- Skills / credential assessment fees for intending migrants,
- Visa fees,
- Processing fees for registration of documents as required by the Portuguese / other Governments,
- Registration / subscription / membership fees to International Organisations.
Release of foreign exchange under LRS is not admissible for the following: (i) travel to and transaction with residents of Nepal and Bhutan.(ii) The remittance towards following transactions is not allowed under LRS: (iii) Remittance out of lottery winnings; (iv) Remittance of income from racing/riding etc. or any other hobby; (v) Remittance for purchase of lottery tickets, banned / proscribed magazines, football pools, sweepstakes, etc.; (vi) Remittance of dividend by any company to which the requirement of dividend balancing is applicable (vii) The remitter (i.e. the user) himself/herself is not a holder in the beneficiary account to which the remittance is being made; (viii) The remittance is not intended and will not be used for trading in foreign currency, or, dealing in any virtual currency; (ix) The remittance is not intended and will not be used for any purpose that is prohibited or restricted under the Foreign Exchange Management Act, 1999 or any rules, regulations or guidelines issued under the said Act.
Documents required:
Retail outward remittance application form-A2 cum LRS declaration, PAN card copy is normally required in all cases. AD banks may ask for any other documents as per their bank rules & procedure.
Disclaimer
The information provided herein is intended solely for educational and informational purposes. It should not be construed as financial, legal, or investment advice. While efforts have been made to ensure accuracy, the content may be subject to change due to legislative amendments or judicial interpretations. Readers are advised to consult with qualified professionals for advice specific to their financial or legal circumstances.
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