The Liberalised Remittance Scheme (LRS) is an initiative by the Reserve Bank of India (RBI) that enables Indian residents, including individuals and minors, to remit up to USD 250,000 per financial year. This remittance can be for permitted current or capital account transactions.
All resident individuals, including minors (with documentation from their natural guardians), are eligible to use the LRS. However, it is important to note that corporates, partnership firms, Hindu Undivided Families (HUFs), and trusts are not permitted to utilize this facility.
Individuals can remit funds under the LRS for various purposes, including:
While LRS facilitates various transactions, some are explicitly prohibited. These include:
The annual remittance limit under LRS is USD 250,000 per person. It is crucial to understand that any unused portion of this limit cannot be carried forward to the following financial year.
Tax Collected at Source (TCS) applies to remittances exceeding a specific threshold. Recent updates indicate:
Yes, resident individuals can use LRS funds to acquire and hold immovable property outside India, provided they comply with foreign regulations and adhere to Indian FEMA guidelines.
Payments made towards servicing education loans or covering tuition fees for studies abroad are permissible under the LRS.
To use the LRS, individuals must submit a declaration form (A2 Form), their Permanent Account Number (PAN), and any other necessary documents as required by the authorized dealer bank. Banks are responsible for ensuring compliance with these regulations.
The current remittance limit of USD 250,000 has been in place since 2015. However, TCS rules and permissible uses have evolved, necessitating users to stay informed through RBI notifications and Union Budget announcements.
Q1. What is the maximum amount I can remit under LRS in a financial year?
Answer: The maximum amount you can remit under the Liberalised Remittance Scheme (LRS) is USD 250,000 per person per financial year.
Q2. Can minors utilize the LRS for remittances?
Answer: Yes, minors can utilize LRS with documentation from their natural guardians, making it accessible for educational and other purposes.
Q3. Are there any specific tax implications for LRS remittances?
Answer: Yes, a Tax Collected at Source (TCS) applies to remittances above ₹7 lakh, with different rates based on the purpose of the remittance.
Q4. Can I use LRS funds for investing in foreign stocks?
Answer: Yes, you can use LRS funds to invest in foreign securities, mutual funds, or startups, among other permitted uses.
Q5. Is it possible to carry forward any unused LRS limit to the next year?
Answer: No, any unused portion of the LRS limit cannot be carried forward to the following financial year; it resets annually.
Question 1: What is the annual limit for remittances under LRS?
A) USD 100,000
B) USD 250,000
C) USD 500,000
D) No limit
Correct Answer: B
Question 2: Which of the following is not a permitted use of LRS?
A) Travel expenses
B) Margin trading
C) Overseas education
D) Foreign investments
Correct Answer: B
Question 3: Who can utilize the LRS?
A) Corporates
B) Trusts
C) Resident individuals
D) Partnership firms
Correct Answer: C
Question 4: What type of TCS applies to remittances above ₹7 lakh?
A) 10%
B) 5%
C) 20%
D) No TCS
Correct Answer: B
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