Update Date – 27 Jan 2025
The transaction limit has now increased to USD 50,000 (and its equivalent) within the overall transfer limit of USD 250,000 per financial year under the Liberalised Remittance Scheme for resident individuals.
What is Liberalised Remittance Scheme?
The Liberalised Remittance Scheme (LRS) is a foreign exchange policy initiative introduced by the Reserve Bank of India (RBI) in 2004. It allows resident individuals in India to freely remit funds up to a specified limit for various permissible transactions involving current or capital accounts.
Key features of the LRS include:
- Remittance Limit: Under the current LRS regulations, resident individuals can remit up to USD 250,000 per financial year (April to March) for permissible transactions[1][2].
- Eligible Individuals: The scheme is available to all resident individuals in India, including minors. However, it does not apply to corporations, partnership firms, Hindu Undivided Families (HUFs), trusts, or other entities[2][3].
- Permissible Transactions: Funds remitted under LRS can be used for various purposes, including:
- Overseas education
- Medical treatment abroad
- Travel expenses
- Investments in foreign markets
- Supporting family members abroad
- Donations
- Business investments[4]
- Restrictions: The LRS cannot be used for certain activities such as margin trading, buying lottery tickets, or trading in foreign exchange abroad[2].
- Tax Implications: As of October 1, 2023, remittances under LRS are subject to Tax Collected at Source (TCS). A 5% TCS applies to remittances exceeding ₹7 lakh in a financial year for education or medical purposes. For other purposes, a 20% TCS rate applies to remittances exceeding ₹7 lakh[4].
The LRS has simplified the process of international fund transfers for Indian residents, promoting financial inclusivity and access to global opportunities while ensuring regulatory compliance[4].