Liberalised Remittance Scheme (LRS): Do you know about Liberalised Remittance Scheme (LRS)? How much money can you send abroad? What is the limit under LRS? If you know then just go this post for a quick revision. If you don’t then read this post thoroughly.
Introduction
Have you ever thought if you need to send money from India to any foreign country i.e outside India, what is the maximum amount of money that you can send? We will answer this question here.
Liberalised Remittance Scheme (LRS)
The Liberalised Remittance Scheme (LRS) was established by Reserve Bank of India and it permits citizens of India to transfer funds abroad.
Since sending money abroad involves foreign exchange, let’s see some important points related to foreign exchange in India.
Important Points related to Foreign Exchange in India
- Foreign Exchange in India is managed by the Reserve Bank of India provided by the Foreign Exchange Management Act, 1999.
- Under the FEMA Act 1999, all transactions involving foreign exchange have been classified either as
- capital account transactions or current account transactions.
- Capital account transactions- It alters the assets or liabilities, including contingent liabilities, outside India of persons resident in India.
- Current account transactions- It does not alter his / her assets or liabilities, including contingent liabilities, outside India are current account transactions.
- In terms of Section 5 of the FEMA, person resident in India are free to buy or sell foreign exchange for any current account transaction except for those transactions for which drawal of foreign exchange has been prohibited by Central Government
What is Liberalised Remittance Scheme (LRS)
Under the Liberalised Remittance Scheme of RBI, all resident Indian individuals (including minors), are allowed to freely remit up to USD 2,50,000 in each financial year (April – March) for any permissible current or capital account transaction or a combination of both.
When the scheme was introduced in the year 2004, that time this limit was of USD 25,000. With time, the scheme has been liberalised to allow more transfer of funds.
For whom LRS is not applicable?
The Liberalised Remittance Scheme (LRS) is not available to corporates, partnership firms, HUF, Trusts etc. It is available for sole proprietor.
Important Points regarding Liberalised Remittance Scheme (LRS)
- You cannot remit money under LRS to countries identified by the Financial Action Task Force (FATF) as “non- cooperative countries and territories”.
- It is mandatory under the Liberalised Remittance Scheme (LRS) to have Permanent Account Number (PAN) for sending outward remittances.
- Maximum Frequency of Remittance: There are no restrictions on the frequency of remittances under LRS. However, the sum total of all remittance should not be more than USD 2,50,000 in a Financial Year.
- The remittances can be made in any freely convertible foreign currency.
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