Liberalised Remittance Scheme: Your guide to getting it right

Wise
29.08.19
3 minute read

Resident and non-resident Indians are traveling and working around the world now more than ever. In an effort to regulate the movement of Indian rupees out of India, the Reserve Bank of India (RBI) first introduced the Liberalised Remittance Scheme (LRS) in 2004.

Since then, it has gone through different iterations to adapt to how modern Indians are moving their money and to manage capital controls. Let’s take a look at what exactly is the Liberalised Remittance Scheme and how, and if, it may affect you in 2019.

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What is the Liberalised Remittance Scheme (LRS)?

The RBI’s Liberalised Remittance Scheme (LRS) allows Authorized Dealers, which are mostly Indian banks, to allow resident Indian individuals to send up to $250,000 USD outside of India every fiscal year (April-March) for specific purposes¹.

It is available for Indian residents with a PAN card, including minors with the appropriate documentation. The LRS is primarily for sending money outside of India for:²

  • Private visits to any country (except Nepal and Bhutan)
  • Gift or donation
  • Going abroad for employment
  • Emigration
  • Maintenance of close relatives abroad
  • Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/ check-up
  • Expenses in connection with medical treatment abroad
  • Studies abroad

LRS also lets you remit your net salary in India after taxes, up to $250,000 USD. To start the process, you would have to designate a bank branch for your remittances. This would have to be a bank that falls under RBI’s Authorized Dealer designation. Then you will need to complete the required forms and documentation for LRS.

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Who is eligible for the Liberalised Remittance Scheme?

The LRS is only available to resident individuals with a PAN card. Corporates, partnership firms, HUF, trusts, or any non-individual entity don’t qualify under LRS³.

LRS is also not available for any of the following types of transactions⁴:
  • Remittance for any purpose specifically prohibited under Schedule-I (like the purchase of lottery tickets/ sweepstakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
  • Remittance from India for margins or margin calls to overseas exchanges/ overseas counterparty.
  • Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market.
  • Remittance for trading in foreign exchange abroad.
  • Capital account remittances, directly or indirectly, to countries identified by the Financial Action Task Force (FATF) as “non- cooperative countries and territories”, from time to time.
  • Remittances directly or indirectly to those individuals and entities identified as posing a significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks.

How frequently can I send money from India?

You can send money as frequently as you like within a financial year. But the total amount of foreign exchange purchased from or remitted through all the sources in India during that year should be within the total limit of $250,000 USD.

How much money can be remitted from India?

You can remit a maximum of $250,000 USD. Not a penny more. If you have hit the $250,000 USD limit, you are not eligible to make any further remittances under this scheme for the remainder of the year. This holds even if you have brought back proceeds or investments into the country from the money you sent⁵.

What currency can I remit money in?

While the limits are designated in USD, the remittance can be made in any freely convertible foreign currency offered through your Authorized Dealer, but the converted amount can not exceed $250,000 USD⁶.

Is PAN mandatory for outward remittance?

Yes, a Permanent Account Number, or PAN, is mandatory for any and all transactions made under the LRS⁷.

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Sources used for this article

  1. RBI- Liberalised Remittance Scheme
  2. LRS- Permitted transactions
  3. LRS- Eligibility
  4. LRS- Not permitted
  5. LRS- Maximum
  6. LRS- Currency
  7. LRS- PAN

This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from TransferWise Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.

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