• 1

Liberalised Remittance Scheme – RBI Guidelines for Outward Remittance

by | Last Updated On March 23, 2023

Understand what is Liberalised Remittance Scheme (LRS) and What are RBI Guidelines for Outward Remittance.

Here we Understand what is Liberalised Remittance Scheme (LRS) and What are RBI Guidelines for Outward Remittance.

Liberalised Remittance Scheme

What is Liberalised Remittance Scheme (LRS)?

Liberalised Remittance Scheme (LRS) is a scheme by RBI that allows individual Indians (including minors) to transfer money abroad every year (April – March). The LRS Scheme was introduced by the RBI on 4th February 2004.

This scheme is available ONLY for individual Indians. This LRS Scheme for Outward Remittance is NOT available to Corporate, Partnership firm, HUF (Hindu Undivided Family) or any Charitable Firm.

Individuals need to follow all RBI guidelines for outward remittance.

Outward Remittance Limit Under LRS:

Year Outward Remittance Limit under LRS (US$)
2004-2007 25,000
2007-2013 2,00,000
2013-2015 75,000
2015-2022 2,50,000

What is Outward Remittance Limit Under Liberalised Remittance Scheme?

RBI Monitors and Keeps Revising the Amount any Indian Resident can Transfer abroad under the LRS.

  • 2004: RBI Introduced the Scheme on February 4, 2004, with a limit of US$ 25,000 Per Year (April – March).
  • 2007: RBI fixed the maximum limit to US$ 2,00,000 Per Year (April – March).
  • 2013: RBI Reduced the Limit to US$ 75,000 Per Year (April – March) after weakening of Indian Rupee.
  • 2015 till Date: RBI Revised the Maximum Remittance Limit to US$ 2,50,000 Per Year (April – March) after Indian Rupee got Stronger.

How to Apply for Liberalised Remittance Scheme?

To apply for LRS, Retail Outward Remittance Application – A2 cum LRS Declaration and PAN Card are required. Passport and other documents may be required as per requirement of remittance.

Use of LRS

Under this Scheme, any individual can transfer fund to any foreign countries. This money can be used:

  1. To Pay for Travel Expenses / Private visits to any country (except Nepal and Bhutan);
  2. Business Travel;
  3. To Pay Medical Bill;
  4. For Gift & Donation;
  5. Going Abroad for Employment;
  6. To Study Abroad;
  7. Emigration;
  8. For Maintenance of Relatives and Investment;
  9. For Investment in Equity, Properties, Debt Instruments.

PS: Buying or Selling of Foreign Exchanges, Purchases of Lottery or Sweep Stakes are completely RESTRICTED under this scheme.

Liberalised Remittance Scheme FAQ

The LRS Scheme is not available to Hindu Undivided Family (HUF), Corporate and Partnership Firms, HUF or Trusts, etc.

In case the remittance is made by the minor, the LRS declaration form must be countersigned by the natural guardian.

  1. Direct or Indirect Remittances to countries identified by the Financial Action Task Force (FATF) as “non cooperative countries or territories”.
  2. For Transactions such as Buying or Selling of Foreign Exchanges, Purchases of Lottery or Sweep Stakes.
  3. Remittance for margins or margin calls to overseas exchanges / overseas counterparty.
  4. Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market.

NO, Liberalised Remittance Scheme is NOT Available for NRI. The LRS scheme strictly applies to Indian residents ONLY.

NRIs don't have any Resident Savings Bank Accounts. They MAY have NRE, NRO or FCNR accounts only. They can remit money abroad from NRO, NRE and FCNR Accounts Subject to Following Limits:

  1. Up to US$ 10,00,000 from an NRO account
  2. No restrictions on remittance from an NRE or FCNR Account.

I have Already Explained above: How to Apply for Liberalised Remittance Scheme?

The remittances can be made in any freely convertible foreign currency.

Any remittance exceeding USD 250,000 require prior permission of the Reserve Bank of India (RBI).

Conclusion

The Liberalised Remittance Scheme (LRS) provides an extensive and structured system for resident individuals who wish to remit money overseas. Individuals can send money to their relatives or for any other transactions which RBI allows.

We hope this Article was useful. Please SHARE with others. Thanks!

Also Read:

Tags:

Nikesh

Nikesh is a Banker and Experienced Financial and Investment Advisor with over 20 Years of Experience in the Field of Finance and Investment. He possesses vast experience in the field of Stock Market, Mutual Funds and Investment Portfolio Management. Keep visiting for daily dose of Share Trading Tips and Tutorials.

Also Read:

1 Response

  1. A Guide for Foreign Investors: Investing in the Indian Stock Market
    September 7, 2023

    […] Repatriating funds from India to your home country is subject to specific rules and limits. Be aware of these guidelines when planning your investments. Understand RBI Guidelines for Outward Remittance – Liberalised Remittance Scheme […]

Leave a Reply