Liberalized Remittance Scheme
1. Background and limit:
Liberalized Remittance Scheme (LRS) was introduced by the Reserve Bank of India (RBI) vide A.P. (DIR Series) Circular No. 64 in February, 2004 as a step towards simplification and liberalization of the foreign exchange facilities available to resident individuals. 

As per the LRS Scheme, resident individuals (RI) are allowed to remit up to USD 2,50,000/- per Financial Year (FY) (April – March) for any permitted capital and current account transactions or combination of both.

Any remittance under the LRS, exceeding USD 2,50,000/- per FY, shall require prior RBI approval (except for certain special transactions, as explained herein, for which prior RBI approval may not be required)

2. Eligibility:
• Available to Resident individuals, including minors
• Not available to corporates, partnership firms, HUF, Trusts, etc.

3. Permissible transactions under LRS:

Sr. No.


Nature of Transactions

                     Conditions/ Points to be kept in mind


Private Visits -  Abroad

Current Account

·      Private visits to countries other than to Nepal and Bhutan.

·       No Restriction on number of visits during the FY.

·   All tour related expenses including cost of transportation outside India and overseas hotel/ lodging expenses shall be included under the LRS limit.

·  Tour operator can collect this amount either in Indian rupees or in foreign currency from the resident traveler.



Current Account

Rupee Gift:

·     RI can make a rupee gift to an NRI/PIO (who is a relative* of RI) by way of crossed cheque/ electronic transfer.

·   Gift amount should be credited to NRO a/c ·       of the recipient and

·     Gift amount should be within the LRS limit

·    It is the responsibility of the Resident donor to ensure all remittances made during the FY including the gift amount is not exceeding LRS limit

Foreign currency Gift – Abroad:

RI can remit funds up to the LRS limit in one FY as Gift to any person resident outside India by transferring the funds directly to recipient’s overseas bank account

NoteRI cannot gift to another RI, in foreign currency for the credit of latter's foreign currency a/c held outside India.



Current Account

RI can remit funds up to the LRS limit in one FY as donation to an organization outside India


Going abroad for employment

Current Account

A person going abroad for employment may can draw up to USD 2,50,000/- per FY from any Authorized Dealer in India



Current Account

·    RI wanting to emigrate can draw foreign exchange from AD Bank up to the amount prescribed by the country of emigration or USD 2,50,000/-.

·    Remittance outside India in excess of above limit allowed only towards meeting incidental expenses in the country of immigration and not for earning points or credits to become eligible for immigration by way of overseas investments in government bonds, land, commercial enterprises etc.


Maintenance of relatives* abroad

Current Account

 A RI can remit up to LRS limit towards maintenance of relatives*


Business trip

Current Account

·  Attending international conference, seminar, specialized training, apprentice training, etc. are treated as business visits.

·  No restriction on number of business trips to foreign countries undertaken during FY

·  However, if an employee is deputed by an entity and business trip related expenses of the employee are borne by such entity, such current account transactions shall be treated outside the purview of LRS limit and may be permitted without any limit subject to verification of bonafides of the transaction


Medical treatment outside India

Current Account

·    Remittance up to LRS limit is allowed without any estimate from doctor/hospital

·  For amount exceeding LRS limit, AD Bank can allow remittance based on an estimate from doctor in India or hospital/ doctor abroad, without RBI approval

·    A person who has fallen sick after proceeding abroad may also be released foreign exchange by an AD Bank (without prior RBI approval) for medical treatment outside India.

·     In addition to above, USD 2,50,000/- per FY is allowed to person for accompanying as attendant to a patient going abroad for medical treatment/ check-up.


Students pursuing studies outside India

Current Account

·    Remittance up to LRS limit is allowed without insisting on any estimate from a foreign university.

·  Remittance exceeding USD 2,50,000/ may be allowed (without prior RBI approval) based on an estimate received from a foreign university. 


Purchasing objects of art

Current Account

It is allowed subject to provisions of other applicable laws such as Extant Foreign Trade Policy of the Government of India.


Any other current account transaction which are not prohibited

Current Account

Permissible to remit funds under LRS


Open, maintain and hold foreign currency a/c outside India

Capital Account

·         Prior approval of RBI is not required.

·  This account may be used for putting through all transactions connected with or arising from remittances eligible under LRS.



Acquisition of immovable property abroad


Capital Account


·  RI can acquire immovable property abroad out of remittances sent under LRS

·      Remittances made for acquiring property outside India can be consolidated in respect of family member/relatives. The same is explained with an example below:

       Eg. A family consist of 4 members- Husband (Mr. A), wife (Mrs. A) and two children named (X) and (Y). They want to purchase an immovable property outside India for USD 10,00,000/- in the name of wife Mrs. A. Each family member can remit funds upto USD 2,50,000/- under LRS and same can be consolidated to acquire property in name of wife, Mrs. A.     


Overseas Direct Investment/ Overseas Portfolio Investment

Capital Account

Permissible in accordance with provisions of-

a) Foreign Exchange Management (Overseas Investment) Rules, 2022,

b) Foreign Exchange Management (Overseas Investment) Regulations, 2022 and

c) Foreign Exchange Management (Overseas Investment) Directions, 2022.


Extending Loans

Capital Account

Lending loan in India- Rupee Loan:

·     Loan can be given to NRI/ PIO relative*.

·  Mode of transfer should be crossed cheque/ electronic transfer and credited to NRO a/c of NRI/ PIO.

·     Loan amount shall not be remitted outside India.

·  Repayment of loan should be made by way of inward remittances through normal banking channels or debit to NRO/NRE/FCNR a/c of the borrower out of sale proceeds of shares/ securities/ immovable property against which loan was granted.

·   Loan should be free of interest and minimum maturity of the loan is one year.

·  Purpose of loan should be meeting borrower’s personal requirements or business purposes in India. It should not be utilized for activities in which investments by persons resident outside India is prohibited namely:

                 i.        Business of chit fund, or

                     ii.        Nidhi Company, or

                    iii.        Agricultural or plantation activities or in real estate business, or construction of farm houses, or

                   iv.        Trading in Transferable Development Rights (TDRs)

Extending loan outside India: It is suggested to approach Bank before undertaking remittance for loan transaction outside India. Practically, in our experience remittance of funds under LRS to extend loan outside India is not permitted.



Capital Account

Permissible subject to fulfillment of specified conditions 

*  Definition of ‘relative’ covers below:
(iHusband; or
(ii) Wife; or
(iii) One person is related to the other in any of the below manner:
      ·         Father (including step-father)
      ·         Mother (including step mother)
      ·         Son (including step-son)
      ·         Son’s wife
      ·         Daughter
      ·         Daughter’s husband
      ·         Brother (including step-brother)
      ·         Sister (including step-sister) 

4. Prohibited Transactions:
i.  Remittances for any prohibited activities such as margin trading, lottery, etc.;
ii.   Remittance for purchase of FCCBs issued by Indian Companies in the overseas secondary market
iii. Remittance for trading in foreign exchange abroad
iv. Remittances directly or indirectly to countries identified by the Financial Action Task Force (FATF) as “non-co-operative countries and territories” (as available from FATF website or as notified by RBI.)
v. Remittances 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 AD Bank.

5. Procedure to remit funds under LRS:
i. RI will have to designate an AD Bank branch through which all remittances under LRS for that FY will be made
ii. The RI should maintain a bank account with the AD bank for a minimum period of one year prior to the remittance for capital account transaction.
iii. RI has to furnish Form A2 regarding purpose of remittance and declare that funds will not be used for prohibited purpose. In case remitter is a minor, Form A2 must be countersigned by minor’s natural guardian.
iv. PAN is mandatory to make remittance under LRS for all transactions
v.  I is required to submit other supporting documents as required by AD Bank


6. Other Important Points:
·      There is no restriction on number of remittances made under the Scheme during a particular FY
·      The payment for capital account transaction should be made out of the funds belonging to the remitter and practically, borrowed funds is not allowed to be remitted under LRS. However, AD Bank can grant credit facilities to facilitate current account remittance under the Scheme.
·      Remittances under LRS can be consolidated in respect of family members. However, clubbing for capital account transaction such as opening of banking accounts or investments like, shares/securities is allowed only when each of the remitter is co-owner/joint-owner of bank account or investment.
·      Earlier, an investor who had remitted funds under the LRS could retain, re-invest the income earned on the investments and was not required to repatriate the funds or income generated out of investments made under the Scheme. However, as per the amendment in Master Direction on Liberalised Remittance Scheme in August, 2022, RI is now required to repatriate and surrendered any received/realized/unspent/unused foreign exchange, unless reinvested, to an authorized person within a period of 180 days from the date of such receipt/ realization/ purchase/ acquisition or date of return to India, as the case may be.

On plain reading, one may understand the key changes under LRS as under

- The amount remitted has to be utilized within 180 days or funds have to be repatriated back to India
- Income also has to be bought back unless re-invested within 180 days
-  Accumulated funds for planned investment/expense (eg. Remittance of USD 2,50,000/- made in initial 3-4 FYs to purchase immovable property equivalent to USD 7,50,000/- in the 4th year) may lose benefit
-  Balances held in bank account abroad or as Fixed Deposits may not amount to investment and may be required to be repatriated back to India 
-  RI may now be required to maintain records of assets/investments held abroad and details of re-investment along with timeline of re-investment etc.

Considering the complexity involved and to understand the extent to which the above provisions shall apply, it is suggested to approach Bank and seek professional advice before making any remittance under LRS 

·     Tax is Collected at Source (TCS) on remittances made under LRS Scheme. Refer FAQ No. 3 under TCS on LRS and purchase of Overseas Tour Program Package.

                                                                                                                                                                                               Updated 03/2024