Liberalised Remittance Scheme

The Liberalised Remittance Scheme (LRS) allows individuals resident in India to send money abroad for permitted personal expenses and investments within a prescribed annual limit. Administered by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act, 1999, it provides a general permission for specified current-account and capital-account transactions rather than requiring individual RBI approval for each eligible remittance.

Eligibility and annual limit

Introduced in 2004, the scheme applies to resident individuals, including minors. Eligibility is based on residence under foreign-exchange law, not merely Indian citizenship.

• An individual may remit up to USD 250,000 per financial year, covering April to March, for permitted transactions taken together.
• The ceiling applies across all authorised dealers used by the individual, rather than separately to each bank or transaction.
• Companies, partnership firms, Hindu Undivided Families and trusts are not eligible under LRS.

Permitted uses

LRS covers both current-account transactions, such as spending on services or transfers, and capital-account transactions, such as acquiring assets abroad.

• Permitted personal purposes include private travel, education, medical treatment, gifts and maintenance of close relatives abroad.
• Permitted capital transactions include opening foreign-currency accounts abroad, purchasing overseas property and making overseas investments, subject to the applicable foreign-exchange rules.
• For studies, medical treatment and emigration, amounts above the ordinary limit may be allowed under the applicable rules and prescribed documentation requirements.

Compliance and restrictions

Remittances are routed through an authorised dealer, with the prescribed application and declarations. PAN is mandatory for remittances under the scheme.

• The remitter must disclose the purpose and ensure that the transaction complies with foreign-exchange law.
• LRS does not permit otherwise prohibited transactions, including remittances for lottery tickets or gambling-related purposes.
• Remittances for margins or margin calls to overseas exchanges or counterparties, and for foreign-exchange trading abroad, are not permitted.

Place in India's external-sector framework

LRS provides limited capital-account liberalisation for individuals while retaining ceilings and safeguards. It is therefore not equivalent to full capital-account convertibility, which would involve much broader freedom to move capital across borders.

• The scheme facilitates household access to overseas education, services and assets while keeping these outward foreign-exchange flows within a regulated framework.