Facilities under Liberalised Remittance Scheme (LRS) for Resident Individuals
In India, remittances to overseas were always subjected to controls and regulations. These restrictions were in place to ensure that uncontrolled overseas remittances do no drain the forex reserves of the country. However, there have always been efforts to support individuals to meet genuine remittance requirement without seeking specific approvals from Reserve Bank of India.
What is Liberalised Remittance Scheme (LRS)?
Liberalised Remittance Scheme (LRS) is the window opened to resident individuals in 2004 to remit money abroad , without seeking specific approvals. Limits of permissible remittances were being enhanced periodically. Effective 1 June 2015, resident individuals are permitted to remit up to USD 2,50,000 across the border per financial year. The period April- March is reckoned as financial year for the purpose. The LRS limit can be utilized by individuals to meet their remittance requirements under permitted current account or capital account transactions or a combination of both.
Who can utilize Liberalised Remittance Scheme (LRS)?
The LRS scheme can be utilized by any resident individual. Minors too can make remittance under the scheme. In respect of members of a family, the limits can be consolidated subject to compliance of terms and conditions by individual family members. If an individual has made remittance under LRS scheme during a financial year, then the applicable limit of Liberalised Remittance Scheme will be reduced by that extent for the said financial year.
What are the permissible capital account transactions under Liberalised Remittance Scheme (LRS)?
Individuals can carry out remittance under LRS for the following capital account transactions:
i. Opening of foreign currency account abroad with a bank
ii. Purchase of property abroad
iii. Making investments abroad
iv. Setting up Wholly owned subsidiary (WOS) and Joint venture (JV) abroad
v. Extending loans( including loans in Indian Rupees) to Non-resident Indians (NRIs) who are relatives as defined in Companies Act 2013.
What are the permissible current account transactions under Liberalised Remittance Scheme (LRS)?
To facilitate ease of transactions, remittances for the following current account purposes are permitted under LRS.
i. Private visits to any country (except Nepal & Bhutan)
ii. Gift or donation
iii. Going abroad for employment
iv. Emigration
v. Maintenance of close relatives abroad
vi. Travel for business, or attending a conference or specialized training
vii. Expenses in connection with medical treatment abroad or for meeting medical expenses or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/check-up.
viii. Studies abroad
ix. Any other current account transaction.
For item numbers (iv) Emigration, (vii) Expenses in connection with medical treatment abroad and (viii) Studies abroad, resident individuals may avail of exchange facility for an amount in excess of USD 2,50,000 prescribed under the LRS on need basis, subject to certain conditions.
What are the prohibited items under Liberalised Remittance Scheme (LRS)?
The remittance facility under LRS scheme is not extended for the following:
i. 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.
ii. Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty.
iii. Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market.
iv. Remittance for trading in foreign exchange abroad.
v. Capital account remittances, directly or indirectly, to countries identified by the Financial Action Task Force (FATF) as ‘non- cooperative countries and territories’, from time to time.
vi. 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.
