Liberalised Remittance Scheme
Liberalised Remittance Scheme
Liberalised Remittance Scheme
Remittance
Scheme
By Jahnavi Tiwari – Summer
Trainee
What is LRS?
LRS was introduced by RBI, as a liberalization measure to facilitate resident individuals to remit
funds abroad for permitted current or capital account transactions or combination of both.
It was first introduced on February 4,2004 and has been subject to several revisions over the
years.
Under this scheme, Resident individuals are allowed to remit freely up to USD 250,000 per
financial year.
The LRS limit over the years
Who is 1. Resident individuals
2. Gift or donation
current 4. Emigration
8. Studies abroad
1. Opening of foreign currency account abroad with a bank
outside India
Permissible
capital 3. Investments in shares, securities, mutual funds, etc abroad
account
transactions 4. Setting up wholly owned subsidiaries (WOS) and Joint
Venture (JV) abroad for bonafide business subject to
stipulated terms and conditions
Remittance for purchase of Foreign Currency Convertible Bonds issued by Indian Companies in the overseas
secondary market
Capital Account remittances, directly or indirectly to countries identified by the Financial Action Task Force
(FATF) as “Non co-operative countries and territories”, from time to time
Remittance directly or indirectly to those individuals and entities identified as posing significant risk of committing
acts of terrorism as advised separately by the RBI to the banks
Modes of Transfer
Few more
purpose of emigration, medical treatment and studies outside, if it is
so required by the country of emigration, medical institute offering
treatment or the university respectively but subject to certain
facts about
conditions. In other cases, prior RBI permission is required to remit
funds exceeding USD 2,50,000/-
LRS
d. Remittances under LRS can be consolidated in respect to current
account transactions of family members (including minors) subject
to individual family members complying with LRS terms and
conditions.
e. Repatriation is not mandatory. If someone has invested across
shares and mutual fund schemes abroad, the LRS rules allow the
investor to retain and reinvest the income earned in that country. It
is not necessary for the investor to repatriate the accrued interest or
dividends on the deposits and investments made abroad