What is the LRS?
Liberalized Remittance Scheme (LRS), of RBI, allows Indian resident individuals to remit up to USD 250,000 per financial year (Apr-Mar) to another country for investments and expenditure. This limit is per individual including minors, which means that a family of 4 can remit up to USD 1 million per financial year.
Capital account transactions under the LRS
- opening of foreign currency account abroad with a bank
- purchase of property abroad
- making investments abroad
- setting up Wholly owned subsidiaries and Joint Ventures abroad;
- extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 2013.
Current account transactions under the LRS
- Private visits to any country (except Nepal and Bhutan)
- Gift or donation
- Going abroad for employment
- Maintenance of close relatives abroad
- Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/ check-up.
- Expenses in connection with medical treatment abroad
- Studies abroad
- Any other current account transaction which is not covered under the definition of current account in FEMA 1999.
What is prohibited?
The remittance facility under the Scheme is not available for the following:
- Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
- Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty.
- Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market.
- Remittance for trading in foreign exchange abroad.
- Capital account remittances, directly or indirectly, to countries identified by the FATF as “non- cooperative countries and territories”, from time to time.
- Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks.