The Liberalised Remittance Scheme (LRS), introduced by the Reserve Bank of India (RBI), permits resident individuals to remit up to USD 250,000 per financial year (April–March) for a range of permissible current and capital account transactions. While there are no restrictions on the number of remittances within a financial year, the aggregate amount from all sources must not exceed the prescribed annual limit.
Eligibility and Applicability
The scheme is available exclusively to resident individuals. It does not apply to corporates, partnership firms, Hindu Undivided Families (HUFs), or trusts.
Key Provisions of the LRS
- Annual Remittance Limit:
Each eligible individual may remit up to USD 250,000 per financial year. - Permissible Transactions:
The scheme covers a variety of transactions, including:- Private visits abroad
- Gifts and donations
- Employment and emigration
- Maintenance of close relatives overseas
- Business travel
- Medical treatment abroad
- Overseas education
- Prohibited Transactions:
Remittances under LRS cannot be made for the following:- Purchase of lottery tickets
- Payments for items designated as banned under applicable laws
- Transactions related to countries identified as high-risk by the Financial Action Task Force (FATF)
- Tax Collected at Source (TCS):
In accordance with prevailing income tax regulations, TCS is applicable on remittances exceeding ₹10 lakh in a financial year, subject to prescribed rates and conditions. - Daily Limits on Digital Platforms:
Certain digital platforms may impose a daily operational limit of USD 25,000 for processing remittance requests under the LRS.
Additional Operational Considerations
- Individual-Based Limit:
The USD 250,000 limit is applicable per individual, and not on a consolidated family basis. - Use of Purpose Codes:
Transactions under LRS must be reported using appropriate purpose codes in accordance with the Foreign Exchange Transactions Electronic Reporting System (FETERS), as mandated by the RBI. - Surrender of Unspent Foreign Exchange:
Any unutilized foreign exchange brought back to India must be surrendered to an authorized person within 180 days of return.
Disclaimer: The information provided herein is exclusively for educational purposes. The information is based on publicly available sources and subject to change. The author shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial/real estate decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
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