{"id":9104,"date":"2023-12-28T17:51:53","date_gmt":"2023-12-28T12:21:53","guid":{"rendered":"https:\/\/fly.finance\/blog\/?p=9104"},"modified":"2024-11-09T13:21:33","modified_gmt":"2024-11-09T07:51:33","slug":"liberalised-remittance-scheme","status":"publish","type":"post","link":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/","title":{"rendered":"Liberalised Remittance Scheme: Features, Benefits, Limitations and More"},"content":{"rendered":"\n<p>The Reserve Bank of India introduced the Liberalised Remittance Scheme (LRS) which has been an important policy. This scheme allows Indian residents to remit (transfer) money abroad for diverse reasons. The scheme permits resident individuals to transfer a specific amount of money in a financial year for certain purposes, such as travel, education, investments, etc., to beneficiaries outside India. It aims to liberalise and simplify the process of sending money abroad for legitimate purposes. Let\u2019s understand all about the Liberalised Remittance Scheme in this blog.<\/p>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-pale-ocean-gradient-background has-background has-fixed-layout\"><tbody><tr><td><strong>Key Takeaways<\/strong><\/td><\/tr><tr><td>LRS enables Indian residents to remit up to USD 250,000 per financial year for permissible current or capital account transactions.<\/td><\/tr><tr><td>Funds can be sent for various purposes. These include education expenses, medical treatment, and gifts and donations, travel and emigration, and investment in foreign assets.<\/td><\/tr><tr><td>Funds can be sent for various purposes. These include education expenses, medical treatment, gifts and donations, travel and emigration, and investment in foreign assets.<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-yoast-seo-table-of-contents yoast-table-of-contents\"><h2 id=\"table-of-contents\">Table of contents<\/h2><ul><li><a href=\"#h-what-is-the-liberalised-remittance-scheme\" data-level=\"2\">What is the Liberalised Remittance Scheme?<\/a><ul><li><a href=\"#h-types-of-transactions-under-lrs\" data-level=\"3\">Types of Transactions Under LRS<\/a><\/li><\/ul><\/li><li><a href=\"#h-features-and-eligibility-of-lrs\" data-level=\"2\">Features and Eligibility of LRS<\/a><\/li><li><a href=\"#h-how-does-the-liberalised-remittance-scheme-work\" data-level=\"2\">How Does the Liberalised Remittance Scheme Work?<\/a><\/li><li><a href=\"#h-benefits-of-lrs\" data-level=\"2\">Benefits of LRS<\/a><\/li><li><a href=\"#h-limitations-and-compliance\" data-level=\"2\">Limitations and Compliance<\/a><\/li><li><a href=\"#h-important-considerations-under-lrs\" data-level=\"2\">Important Considerations under LRS<\/a><\/li><li><a href=\"#h-faqs-on-the-liberalised-remittance-scheme\" data-level=\"2\">FAQs on the Liberalised Remittance Scheme<\/a><\/li><\/ul><\/div>\n\n\n\n<p class=\"has-pale-ocean-gradient-background has-background\"><strong>Also Read: Check out the FAQs on the <\/strong><a href=\"https:\/\/fly.finance\/blog\/education-loan\/faqs-on-restructuring-scheme-of-rbi\/\"><strong>Restructuring 2.0 Scheme of RBI<\/strong><\/a><strong> that provides benefits to the borrowers affected by the COVID-19 pandemic.\u00a0<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-liberalised-remittance-scheme\"><span id=\"what-is-the-liberalised-remittance-scheme\">What is the Liberalised Remittance Scheme?<\/span><\/h2>\n\n\n\n<p>The LRS enables Indian residents to remit up to&nbsp;<strong>USD 250,000<\/strong>&nbsp;per financial year (April to March) for permissible current or capital account transactions. This includes payments for education, medical treatment, travel, and investments abroad, among other uses. The scheme simplifies the process of sending money overseas, removing previous restrictions under the Foreign Exchange Management Act (FEMA) of 1999.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-types-of-transactions-under-lrs\"><span id=\"types-of-transactions-under-lrs\">Types of Transactions Under LRS<\/span><\/h3>\n\n\n\n<figure class=\"wp-block-table is-style-stripes\"><table class=\"has-fixed-layout\"><tbody><tr><td><strong>Types of Accounts<\/strong><\/td><td><strong>Types of Transactions<\/strong><\/td><\/tr><tr><td>Capital Account Transactions<\/td><td>&#8211; Private visits abroad (excluding Bhutan and Nepal)<br>&#8211; Maintenance of family members living overseas<br>&#8211; Medical treatment and educational expenses<\/td><\/tr><tr><td>Current Account Transactions<\/td><td>&#8211; Purchase of property abroad<br>&#8211; Investments in foreign securities or mutual funds<br>&#8211; Setting up joint ventures or subsidiaries outside India<\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-features-and-eligibility-of-lrs\"><span id=\"features-and-eligibility-of-lrs\">Features and Eligibility of LRS<\/span><\/h2>\n\n\n\n<p>Under LRS, you can spend and transfer money to foreign countries for education, purchase of assets like shares and property, tourism, medical purposes, and many more. For this, resident individuals can open and maintain a foreign currency account with overseas banks to carry out the transactions. Know about <a href=\"https:\/\/fly.finance\/blog\/money-transfer\/tips-for-cheapest-international-money-transfers\/\"><strong>the cheapest international money transfers<\/strong><\/a> in our blog.&nbsp;<\/p>\n\n\n\n<p>Here are some more features of the liberalised remittance scheme.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Under the LRS, resident individuals, including minors, are also eligible to remit a specified amount per financial year.<\/li>\n\n\n\n<li>Corporates, HUFs, partnership firms, and charitable trusts are not eligible under the Liberalised Remittance Scheme.&nbsp;<\/li>\n\n\n\n<li>If you are an Indian residing in some other country for employment purposes, FEMA (The Foreign Exchange Management Act, 1999), considers you as an NRI and you are not eligible for remittances under LRS, even though you are a citizen of India, but you are not an Indian resident.&nbsp;<\/li>\n\n\n\n<li>There are no limits on the number of transactions that can be made. However. the permissible limit is currently set at an amount of USD 250,000 per person per financial year, and the value of foreign transactions can not exceed this limit.&nbsp;<\/li>\n\n\n\n<li>If an individual needs to remit more than the permissible limit, they must seek permission from the RBI.&nbsp;<\/li>\n\n\n\n<li>Eligible purposes include education, travel, medical treatment, gifting, investment in securities, and more.<\/li>\n\n\n\n<li>Individuals are required to adhere to the guidelines set by RBI regarding documentation and reporting requirements for transactions conducted under the LRS.<\/li>\n\n\n\n<li>Permanent Account Number (PAN) is mandatory for carrying out all transactions under this scheme.&nbsp;<\/li>\n\n\n\n<li>The applicant must have maintained a bank account with the bank for a minimum of one year before making any sort of remittances.&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-how-does-the-liberalised-remittance-scheme-work\"><span id=\"how-does-the-liberalised-remittance-scheme-work\">How Does the Liberalised Remittance Scheme Work?<\/span><\/h2>\n\n\n\n<p>Many Indian banks operate under a liberalised remittance scheme. Check about <a href=\"https:\/\/fly.finance\/blog\/education-loan\/hdfc-bank-remittance-services\/\"><strong>HDFC Bank remittance services<\/strong><\/a> here.&nbsp;<\/p>\n\n\n\n<p>Any individual who is an Indian citizen is eligible to transfer money under LRS. It includes minors as well, however, the natural guardian of the minor must sign Form A2 in the LRS declaration form. For consolidating remittances under LRS, individuals must adhere to the terms and conditions stated.&nbsp;<\/p>\n\n\n\n<p>Clubbing by other family members is not permitted for capital account operations, such as opening a bank account or making investments if these family members are not co-partners or co-owners of the foreign bank account, investment, or property. A resident can also not offer gifts in international currency under this scheme.&nbsp;<\/p>\n\n\n\n<p>To make the transactions possible, one must convert the Indian currency into US Dollars to invest or spend overseas. However, this is not mandatory, as you can make remittances in any freely convertible currency.&nbsp;<\/p>\n\n\n\n<p class=\"has-pale-ocean-gradient-background has-background\"><strong>Also Read: Many students from low-income families benefit from schemes on Education Loan. Learn about the benefits of <\/strong><a href=\"https:\/\/fly.finance\/blog\/education-loan\/interest-subsidy-schemes-on-education-loan\/\"><strong>Interest Subsidy Schemes on Education Loans<\/strong><\/a><strong> in our blog.&nbsp;<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-benefits-of-lrs\"><span id=\"benefits-of-lrs\">Benefits of LRS<\/span><\/h2>\n\n\n\n<p>The Liberalised Remittance Scheme introduced by the Reserve Bank of India does offer many benefits to the resident individuals. Some of the benefits of <a href=\"https:\/\/fly.finance\/blog\/education-loan\/what-is-remittance\/\"><strong>foreign remittances<\/strong><\/a> are discussed below-&nbsp;&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The scheme facilitates diverse financial objectives. It enables individuals to fulfil various financial needs, including education expenses, travel, investments, and more.<\/li>\n\n\n\n<li>It helps in the diversification of investments and allows investors to diversify their portfolios by investing in foreign financial instruments or properties.<\/li>\n\n\n\n<li>The scheme provides international exposure to individuals and offers opportunities to gain exposure to global markets and educational institutions.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-limitations-and-compliance\"><span id=\"limitations-and-compliance\">Limitations and Compliance<\/span><\/h2>\n\n\n\n<p>With the features and benefits discussed above, the scheme also has certain limitations and compliance formalities to be followed.&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The LRS imposes certain restrictions and reporting requirements to ensure compliance with regulations.<\/li>\n\n\n\n<li>Any violation or misuse of the scheme can result in penalties or legal consequences.<\/li>\n\n\n\n<li>Individuals need to keep track of their remittances, follow documentation guidelines, and report transactions as per RBI norms.<\/li>\n<\/ul>\n\n\n\n<p>Besides this, profits from investments made under the LRS are taxable in India. Long-term capital gains (held for over two years) are taxed at 20%, while short-term gains are taxed at normal income tax rates. Additionally, a 5% Tax Collected at Source (TCS) applies to remittances exceeding INR 7,00,000.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-important-considerations-under-lrs\"><span id=\"important-considerations-under-lrs\">Important Considerations under LRS<\/span><\/h2>\n\n\n\n<p>LRS cannot be used for margin trading, purchasing lottery tickets, or sending money to countries identified as non-cooperative by the Financial Action Task Force (FATF). Secondly, if a remittance exceeds USD 250,000 for specific reasons like medical treatment or education, prior approval from the RBI is required.<\/p>\n\n\n\n<p>This was all about the Liberalised Remittance Scheme of RBI, its features, benefits and limitations. Understanding this scheme can help you make informed decisions about making remittances.&nbsp;<\/p>\n\n\n\n<p>To know more about the currency exchange, the best <a href=\"https:\/\/fly.finance\/international-bank-account\"><strong>international bank accounts for students<\/strong><\/a>, forex and banking experience for global students or <a href=\"https:\/\/fly.finance\/blog\/money-transfer\/\"><strong>international money transfers<\/strong><\/a>, reach out to our experts at 1800572126 to help ease your <a href=\"https:\/\/leverageedu.com\/\"><strong>study abroad<\/strong><\/a> experience.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-faqs-on-the-liberalised-remittance-scheme\"><span id=\"faqs-on-the-liberalised-remittance-scheme\">FAQs on the Liberalised Remittance Scheme<\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1703847198279\"><strong class=\"schema-faq-question\">What is a liberalised remittance scheme?<\/strong> <p class=\"schema-faq-answer\">The RBI introduced the LRS scheme or Liberalised Remittance Scheme to facilitate hassle-free foreign exchange. Under this scheme, an Indian resident can transfer funds of up to USD 250,000 in financial years.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1703847200955\"><strong class=\"schema-faq-question\">Who is eligible for the liberalised remittance scheme?<\/strong> <p class=\"schema-faq-answer\">Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1703847206494\"><strong class=\"schema-faq-question\">Is it mandatory for resident individuals to have a Permanent Account Number (PAN) for sending outward remittances under the Scheme?<\/strong> <p class=\"schema-faq-answer\">Yes, it is compulsory to have a PAN for all the transactions under the Liberalised remittance scheme.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1703847216997\"><strong class=\"schema-faq-question\">Who is not eligible under LRS?<\/strong> <p class=\"schema-faq-answer\">The LRS is for people who are residents of India as defined by the Foreign Exchange Management Act (FEMA). It cannot be used by corporations, partnership firms, Hindu Undivided Family (HUF), trusts, etc.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1703847224271\"><strong class=\"schema-faq-question\">Can I only send remittances in USD?<\/strong> <p class=\"schema-faq-answer\">No, you can make your remittance in any freely convertible foreign currency.<\/p> <\/div> <\/div>\n\n\n\n<figure class=\"wp-block-table\"><table class=\"has-pale-ocean-gradient-background has-background\"><tbody><tr><td><strong>Related Blogs<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/fly.finance\/blog\/money-transfer\/what-is-a-gic-account\/\"><strong>What is a GIC Account?<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/fly.finance\/blog\/money-transfer\/best-banks-in-india-for-inward-remittance\/\"><strong>Best Banks in India for Inward Remittances<\/strong><\/a><\/td><\/tr><tr><td><a href=\"https:\/\/fly.finance\/blog\/education-loan\/idfc-first-bank-loan-transfer\/\"><strong>IDFC First Bank Loan Transfer<\/strong><\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<p><strong>Follow Us on Social Media <\/strong><\/p>\n\n\n\n<ul class=\"wp-block-social-links is-layout-flex wp-block-social-links-is-layout-flex\"><li class=\"wp-social-link wp-social-link-instagram  wp-block-social-link\"><a href=\"https:\/\/instagram.com\/flydotfinance\" class=\"wp-block-social-link-anchor\"><svg width=\"24\" height=\"24\" viewBox=\"0 0 24 24\" version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" aria-hidden=\"true\" focusable=\"false\"><path d=\"M12,4.622c2.403,0,2.688,0.009,3.637,0.052c0.877,0.04,1.354,0.187,1.671,0.31c0.42,0.163,0.72,0.358,1.035,0.673 c0.315,0.315,0.51,0.615,0.673,1.035c0.123,0.317,0.27,0.794,0.31,1.671c0.043,0.949,0.052,1.234,0.052,3.637 s-0.009,2.688-0.052,3.637c-0.04,0.877-0.187,1.354-0.31,1.671c-0.163,0.42-0.358,0.72-0.673,1.035 c-0.315,0.315-0.615,0.51-1.035,0.673c-0.317,0.123-0.794,0.27-1.671,0.31c-0.949,0.043-1.233,0.052-3.637,0.052 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class=\"wp-block-social-link-anchor\"><svg width=\"24\" height=\"24\" viewBox=\"0 0 24 24\" version=\"1.1\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" aria-hidden=\"true\" focusable=\"false\"><path d=\"M12 2C6.5 2 2 6.5 2 12c0 5 3.7 9.1 8.4 9.9v-7H7.9V12h2.5V9.8c0-2.5 1.5-3.9 3.8-3.9 1.1 0 2.2.2 2.2.2v2.5h-1.3c-1.2 0-1.6.8-1.6 1.6V12h2.8l-.4 2.9h-2.3v7C18.3 21.1 22 17 22 12c0-5.5-4.5-10-10-10z\"><\/path><\/svg><span class=\"wp-block-social-link-label screen-reader-text\">Facebook<\/span><\/a><\/li><\/ul>\n","protected":false},"excerpt":{"rendered":"<p>The Reserve Bank of India introduced the Liberalised Remittance Scheme (LRS) which has been an important policy. This scheme allows Indian residents to remit (transfer) money abroad for diverse reasons. The scheme permits resident individuals to transfer a specific amount of money in a financial year for certain purposes, such as travel, education, investments, etc., &#8230; <a title=\"Liberalised Remittance Scheme: Features, Benefits, Limitations and More\" class=\"read-more\" href=\"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/\" aria-label=\"Read more about Liberalised Remittance Scheme: Features, Benefits, Limitations and More\">Read more<\/a><\/p>\n","protected":false},"author":29,"featured_media":9108,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[47],"tags":[],"class_list":["post-9104","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-money-transfer"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v27.2 (Yoast SEO v27.2) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Liberalised Remittance Scheme: Features, Benefits, Limitations and More<\/title>\n<meta name=\"description\" content=\"This blog is all about Liberalised Remittance Scheme. 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I'm Shubhika- a proud graduate in English Literature and Language from Delhi University. My journey as a content writer transitioned from online teacher into the world of words. Stepping into the domain of blogs and articles, I discovered my passion for writing growing deeper and stronger. Having said that, I have experience of writing for diverse industries in automobile, technology, ed-tech, finance and mental-health; crafting details to help you find the solution to what you are looking for. Join me as I invite you all explore and learn together.","sameAs":["https:\/\/www.facebook.com\/shubhika.garg\/","https:\/\/www.instagram.com\/shubhika.garg\/","https:\/\/www.linkedin.com\/in\/shubhikagarg71\/","https:\/\/www.tumblr.com\/blog\/shubhikahere"],"url":"https:\/\/fly.finance\/blog\/author\/shubhika\/"},{"@type":"Question","@id":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/#faq-question-1703847198279","position":1,"url":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/#faq-question-1703847198279","name":"What is a liberalised remittance scheme?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The RBI introduced the LRS scheme or Liberalised Remittance Scheme to facilitate hassle-free foreign exchange. Under this scheme, an Indian resident can transfer funds of up to USD 250,000 in financial years.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/#faq-question-1703847200955","position":2,"url":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/#faq-question-1703847200955","name":"Who is eligible for the liberalised remittance scheme?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/#faq-question-1703847206494","position":3,"url":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/#faq-question-1703847206494","name":"Is it mandatory for resident individuals to have a Permanent Account Number (PAN) for sending outward remittances under the Scheme?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Yes, it is compulsory to have a PAN for all the transactions under the Liberalised remittance scheme.\u00a0","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/#faq-question-1703847216997","position":4,"url":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/#faq-question-1703847216997","name":"Who is not eligible under LRS?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The LRS is for people who are residents of India as defined by the Foreign Exchange Management Act (FEMA). It cannot be used by corporations, partnership firms, Hindu Undivided Family (HUF), trusts, etc.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/#faq-question-1703847224271","position":5,"url":"https:\/\/fly.finance\/blog\/money-transfer\/liberalised-remittance-scheme\/#faq-question-1703847224271","name":"Can I only send remittances in USD?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"No, you can make your remittance in any freely convertible foreign currency.","inLanguage":"en-US"},"inLanguage":"en-US"}]}},"_links":{"self":[{"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/posts\/9104","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/users\/29"}],"replies":[{"embeddable":true,"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/comments?post=9104"}],"version-history":[{"count":9,"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/posts\/9104\/revisions"}],"predecessor-version":[{"id":15988,"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/posts\/9104\/revisions\/15988"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/media\/9108"}],"wp:attachment":[{"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/media?parent=9104"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/categories?post=9104"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/fly.finance\/blog\/wp-json\/wp\/v2\/tags?post=9104"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}