Liberalised Remittances Scheme:
Analysis of data on the outward remittances under the RBI’s Liberalised Remittances Scheme (LRS) shows that the amount of money sent or spent abroad by Indians fell to a two-year low of $1.94 billion in November 2025, pulled down in large part by a sharp dip in the amount spent on foreign studies.
- It is part of the Foreign Exchange Management Act (FEMA) 1999, which lays down the guidelines for outward remittance from India.
- Under LRS, all resident individuals, including minors, are allowed to freely remit up to USD $250,000 per financial year (April–March).
- This can be for any permissible current or capital account transaction, or a combination of both.
- Any remittance exceeding this limit requires prior permission from the RBI.
- Only individual Indian residents, including minors, are permitted to remit funds under LRS.
- Corporates, partnership firms, Hindu Undivided Family (HUF), trusts, , are excluded from its ambit.
- There is no restriction on the frequency or number of transactions during a financial year.
- However, the total amount of foreign exchange remitted through all sources in India under LRS during the current FY should be within the LRS limit.
- Types of transactions permitted:
- Opening of a foreign currency account abroad with a bank;
- Acquisition of immovable property abroad, overseas direct investment (ODI), and overseas portfolio investment (OPI);
- Extending loans, including loans in Indian Rupees to non-resident Indians (NRIs) who are relatives as defined in the Companies Act, 2013;
- Private visits abroad (excluding Nepal and Bhutan);
- Maintenance of relatives abroad;
- Medical treatment abroad;
- Pursuing studies abroad;
- Any other current account transaction that does not fall under the definition of current account (FEMA 199);
- Types of transactions not permitted:
- Remittance for purposes specifically prohibited, such as buying lottery tickets or restricted items.
- Sending money from India for margins or margin calls to overseas exchanges or parties.
- Remittance for buying Foreign Currency Convertible Bonds (FCCBs) issued by Indian companies in the overseas secondary market.
- Sending money for trading in foreign exchange abroad.
- Sending money to individuals and entities identified as posing a significant risk of terrorism.
- Sending money to countries identified as “non-cooperative countries and territories” by the Financial Action Task Force (FATF).
- Tax Imposed on LRS:
- Tax Collected at Source (TCS) applies to LRS transactions exceeding INR 7 lakh in a financial year.
- Current TCS rates are 20% for general remittances and may vary based on the purpose and the total amount remitted.
- Any profit made from abroad investments under LRS is subject to tax in India depending on the holding period.
