Liberalised Remittance Scheme
About
- The Liberalised Remittance Scheme (LRS), introduced by the Reserve Bank of India in 2004 enables Indian residents (including minors) to freely remit funds abroad for various approved purposes such as overseas business trip, education, medical treatment, investments in shares, buying immovable properties, etc.
- As per current LRS regulations, Indian residents can remit up to USD 2,50,000 per Financial Year.
- These funds can be used for any permissible current or capital account transaction, or a combination of both.
Objective
- The primary objective of LRS is to liberalize the existing foreign exchange regulations and facilitate the smooth transfer of funds abroad by Indian residents.
- The scheme also aims at promoting international trade and investment, as well as for facilitating capital flows into and out of India.
Who can avail the benefits under this scheme?
- In order to avail the benefit of the LRS, the individual must be an Indian resident as defined under the Foreign Exchange Management Act (FEMA). It cannot be used by corporations, partnership firms, Hindu Undivided Family (HUF), trusts, etc.
- Under FEMA, a person is treated as a resident if he has been in India for more than 182 days in the preceding year.
- He/she must also have a valid PAN card, a bank account in India, and a valid passport.
Limitations
- The maximum amount that can be remitted in a financial year is USD 2,50,000. Any amount exceeding this limit requires prior permission from RBI.
- Remittances under the scheme are not permitted for certain activities such as purchase of lottery tickets, margin trading, and speculation in foreign exchange markets.