{"id":11847,"date":"2022-08-19T21:56:20","date_gmt":"2022-08-19T16:26:20","guid":{"rendered":"https:\/\/blogrevamp.cashfree.com\/?p=11847"},"modified":"2026-04-07T14:11:31","modified_gmt":"2026-04-07T08:41:31","slug":"liberalised-remittance-scheme","status":"publish","type":"post","link":"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/","title":{"rendered":"All You Need To Know About RBI\u2019s Liberalised Remittance Scheme\u00a0"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a8f2c937428e\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #364250;color:#364250\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #364250;color:#364250\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a8f2c937428e\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#What_Is_The_Liberalised_Remittance_Scheme\" >What Is The Liberalised Remittance Scheme?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Key_Highlights_Of_The_Liberalised_Remittance_Scheme\" >Key Highlights Of The Liberalised Remittance Scheme<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Remittance_Purposes_Defined_Under_LRS\" >Remittance Purposes Defined Under LRS<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Current_Account_Transactions\" >Current Account Transactions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Capital_Account_Transactions\" >Capital Account Transactions<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Are_NRIs_eligible_for_LRS\" >Are NRIs eligible for LRS?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Bank_Accounts\" >Bank Accounts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Loans\" >Loans<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Process_For_Remitting_Funds_Under_Liberalised_Remittance_Scheme_Regulations\" >Process For Remitting Funds Under Liberalised Remittance Scheme Regulations<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Prohibited_Transactions_Under_Liberalised_Remittance_Scheme\" >Prohibited Transactions Under Liberalised Remittance Scheme?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Parting_Words\" >Parting Words<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><\/li><\/ul><\/nav><\/div>\n\n<p class=\"wp-block-paragraph\">A few years ago, sending money to a foreign nation for various purposes such as education, medical emergencies, etc. was a cumbersome, tiring, and time-consuming process. There was no structured or proper way to securely and safely send money internationally.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">So, to streamline outward remittances of such funds, the <a href=\"https:\/\/www.rbi.org.in\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Reserve Bank of India<\/a> introduced the Liberalised Remittance Scheme (LRS).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This blog will shed light on:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>What is LRS?<\/li>\n\n\n\n<li>How can residents send money to foreign nations under LRS?<\/li>\n\n\n\n<li>Which transactions are allowed and prohibited under the scheme?<\/li>\n\n\n\n<li>What does LRS mean for NRIs<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s get started!<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-what-is-the-liberalised-remittance-scheme\"><span class=\"ez-toc-section\" id=\"What_Is_The_Liberalised_Remittance_Scheme\"><\/span>What Is The Liberalised Remittance Scheme?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">RBI&#8217;s Liberalised Remittance Scheme (LRS) is a process that allows residents individuals to remit or send money to another country for investment, academics, buying property, and expenditure purposes during a financial year.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As of date, an individual can send a total of USD 2,50,000 (per person) to a foreign country during a financial year, however, in numerous batches. Meaning, if a person has two children studying in the United States, they can send a total of USD 5,00,000 during a financial year.&nbsp;&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The Reserve Bank of India introduced this scheme on February 4, 2004, which was a result of one of the <a href=\"https:\/\/rbidocs.rbi.org.in\/rdocs\/PublicationReport\/Pdfs\/72250.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Tarapore Committee<\/a>\u2019s recommendations. It clearly defines proper guidelines and procedures that individuals must follow to smoothly send money abroad.<\/p>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/lh4.googleusercontent.com\/OIs2erjs6NAKJ9Revw4i8FRtE2r6AtBsRsAolCQO_0fg_MZpvbyDxRgXopwh_TAhxfh4GhX43GhhgXQir1njLbTNFJKgiz6SR6Y9fz0pxGb0UeX9QTqNcBCOZeUHOY0UAgZjmfaB9feJYRRnth69qyo\" alt=\"\"\/><figcaption class=\"wp-element-caption\"><em>Increase in LRS limit between 2004 and 2015<br>LRS limit has remained the same since 2015<\/em><\/figcaption><\/figure>\n<\/div>\n\n\n<p class=\"wp-block-paragraph\">The Ministry of Finance has legalised the scheme under the Foreign Exchange Management Act of 1999. At present, the Enforcement Directorate enforces and looks over it.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-key-highlights-of-the-liberalised-remittance-scheme\"><span class=\"ez-toc-section\" id=\"Key_Highlights_Of_The_Liberalised_Remittance_Scheme\"><\/span>Key Highlights Of The Liberalised Remittance Scheme<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">So now, let\u2019s dig deep into some liberalised remittance scheme details. Some highlights of the scheme are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Any person who is a resident of India (<a href=\"https:\/\/chemexcil.in\/uploads\/FEMA_1999.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">as per section-2(v) of the Foreign Exchange Management Act, 1999<\/a>) can send funds via LRS<\/li>\n\n\n\n<li>LRS remittances can only be done via authorised dealers (ADs) such as banks listed by the Reserve Bank of India<\/li>\n\n\n\n<li>For every remittance processed under LRS, the requesting individual needs to provide their PAN details for payment processing and verification purposes<\/li>\n\n\n\n<li>Corporates, partnership firms, HUDs or charitable trusts cannot take advantage of this scheme<\/li>\n\n\n\n<li>The scheme is applicable in the case of sole proprietorship where there\u2019s no legal difference between an individual and the owner<\/li>\n\n\n\n<li>Indians can send Money via LRS  to any nation<\/li>\n\n\n\n<li>Senders can invest remitted amounts in shares, debt instruments, and for buying immovable properties in overseas markets<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-remittance-purposes-defined-under-lrs\"><span class=\"ez-toc-section\" id=\"Remittance_Purposes_Defined_Under_LRS\"><\/span>Remittance Purposes Defined Under LRS<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The Liberalised Remittance Scheme of RBI defines a comprehensive list of purposes against which residents individuals can remit funds. The list has been divided into two categories,<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Current Account Transactions<\/li>\n\n\n\n<li>Capital Account Transactions<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">Let\u2019s take a look at the categories.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-current-account-transactions\"><span class=\"ez-toc-section\" id=\"Current_Account_Transactions\"><\/span>Current Account Transactions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">These account for those types of transactions that do not pose any change in the assets or liabilities of a person.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As per <a href=\"https:\/\/upload.indiacode.nic.in\/showfile?actid=AC_CEN_2_45_00004_199942_1517807323986&amp;type=rule&amp;filename=FEM%20(CAT)%20Rules.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Para-1 of Schedule III<\/a>, as defined in the Foreign Exchange Management Amendment Rules, 2015, current account transactions allowed under LRS are as follows:&nbsp;<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>To send gifts to friends, family, acquaintances, etc. who live in a foreign country<\/li>\n\n\n\n<li>To send donations to charities operating abroad<\/li>\n\n\n\n<li>When shifting\/settling in another country&nbsp;<\/li>\n\n\n\n<li>When making private visits to foreign countries (excluding restricted nations defined as \u201cNon-cooperative countries and territories\u201d by the government)&nbsp;<\/li>\n\n\n\n<li>When attending business meetings abroad&nbsp;<\/li>\n\n\n\n<li>When going to a foreign country for medical check-ps or seeking treatments&nbsp;<\/li>\n\n\n\n<li>Also for extending financial support to close relatives living outside of India<\/li>\n\n\n\n<li>When going abroad to attend specialised training programs such as diversity awareness training, sexual harassment prevention training, etc.<\/li>\n\n\n\n<li>When attending conferences, seminars, etc. in a foreign nation<\/li>\n\n\n\n<li>Send money to students studying in a foreign country to support their expenses including fees, living expenses, etc.&nbsp;&nbsp;&nbsp;<\/li>\n\n\n\n<li>Transfer money even for employment purposes&nbsp;<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" fetchpriority=\"high\" decoding=\"async\" width=\"770\" height=\"409\" data-attachment-id=\"11851\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/permissible-current-account-transactions\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-current-account-transactions.png?fit=1080%2C574&amp;ssl=1\" data-orig-size=\"1080,574\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"permissible-current-account-transactions\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-current-account-transactions.png?fit=770%2C409&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-current-account-transactions.png?resize=770%2C409&#038;ssl=1\" alt=\"Permissible current account\" class=\"wp-image-11851\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-current-account-transactions.png?resize=1024%2C544&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-current-account-transactions.png?resize=300%2C159&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-current-account-transactions.png?resize=768%2C408&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-current-account-transactions.png?w=1080&amp;ssl=1 1080w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-capital-account-transactions\"><span class=\"ez-toc-section\" id=\"Capital_Account_Transactions\"><\/span>Capital Account Transactions<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">These are those that bring about a change in the assets and liabilities of a person. Capital account transactions allowed under LRS are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Open, hold, or maintain a foreign currency account in a foreign country\u2019s bank<\/li>\n\n\n\n<li>Purchase a property abroad<\/li>\n\n\n\n<li>Make investments in equity shares, mutual funds, debt instruments, venture capital funds, etc. in an overseas market<\/li>\n\n\n\n<li>Extend loans to NRI relatives in Indian Rupee as defined under the <a href=\"https:\/\/www.mca.gov.in\/Ministry\/pdf\/CompaniesAct2013.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Companies Act, 2013<\/a><\/li>\n\n\n\n<li>Set up a Wholly Owned subsidiary (WOS) or a Joint Venture (JV) abroad<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img data-recalc-dims=\"1\" decoding=\"async\" width=\"770\" height=\"299\" data-attachment-id=\"11849\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/liberalised-remittance-scheme\/permissible-capital-account-transactions\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-capital-account-transactions.png?fit=1080%2C419&amp;ssl=1\" data-orig-size=\"1080,419\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"permissible capital account transactions under LRS\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-capital-account-transactions.png?fit=770%2C299&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-capital-account-transactions.png?resize=770%2C299&#038;ssl=1\" alt=\"permissible capital account transactions under LRS\" class=\"wp-image-11849\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-capital-account-transactions.png?resize=1024%2C397&amp;ssl=1 1024w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-capital-account-transactions.png?resize=300%2C116&amp;ssl=1 300w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-capital-account-transactions.png?resize=768%2C298&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/permissible-capital-account-transactions.png?w=1080&amp;ssl=1 1080w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">There are some prerequisites for Capital Account Transactions. These are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>To make remittances for Capital Account Transactions, an applicant must maintain a bank account for a period of at least one year before requiring the remittance<\/li>\n\n\n\n<li>ADs also ensure, with proper due diligence, that the source of funds and remittance is according to the guidelines for the Liberalised Remittance Scheme by the RBI<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-are-nris-eligible-for-lrs\"><span class=\"ez-toc-section\" id=\"Are_NRIs_eligible_for_LRS\"><\/span>Are NRIs eligible for LRS?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-bank-accounts\"><span class=\"ez-toc-section\" id=\"Bank_Accounts\"><\/span>Bank Accounts<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The Liberalised Remittance Scheme is only available for all Indian residents living in the country irrespective of their citizenship. However, for NRIs with Indian bank accounts, the remittance rules are a bit different.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">A Non-resident Indian can hold any of the following bank account types in India.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>NRE (Non-resident external)<\/li>\n\n\n\n<li>NRO (Non-Resident Ordinary)<\/li>\n\n\n\n<li>FCNR (B) (Foreign Currency Non-Resident Bank Account)<\/li>\n<\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">As per the RBI\u2019s guidelines, an NRI can remit up to USD 10,00,000 from India per financial year through their NRO account.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Meanwhile, in the case of NRE and FCNR (B) accounts, there\u2019s no defined upper limit. However, the RBI has imposed certain restrictions on the type of inward remittances allowed on the NRE and FCNR (B) accounts by the RBI.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The RBI defines specific terms and conditions relating to NRI bank accounts in India. They must check the latest guidelines before proceeding with any remittances from the above-mentioned accounts.&nbsp;<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"h-loans\"><span class=\"ez-toc-section\" id=\"Loans\"><\/span>Loans<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">As mentioned above, a<strong> resident individual can extend loans to an NRI relative<\/strong> in Indian Rupee. However, the relative should have a close relationship.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Thus, senders can send loans via crossed cheques or via electronic transfers with certain terms and conditions. These are as follows:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The senders must give the loan interest-free and also with a maturity period of a minimum of 1 year<\/li>\n\n\n\n<li>They must send the loan to an NRO account of the close NRI relative<\/li>\n\n\n\n<li>The loan amount must be remitted outside of India<\/li>\n\n\n\n<li>The loan amount cannot exceed LRS\u2019s defined limit of USD 2,50,000 per financial year&nbsp;<\/li>\n\n\n\n<li>The loan extended will automatically reduce the sender\u2019s LRS limit for the financial year&nbsp;&nbsp;<\/li>\n\n\n\n<li>The sender or the receiver of the loan amount cannot use the money for making investments in-\n<ul class=\"wp-block-list\">\n<li>Chit Funds<\/li>\n\n\n\n<li>Nidhi Company<\/li>\n\n\n\n<li>Agricultural or plantations activities<\/li>\n\n\n\n<li>real estate business or building farmhouses including the development of townships, construction of commercial or residential premises, roads or bridges<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>The receiver must repay the loan through inward remittance or via a debit to the NRO\/NRE\/FCNR account of the borrower&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-process-for-remitting-funds-under-liberalised-remittance-scheme-regulations\"><span class=\"ez-toc-section\" id=\"Process_For_Remitting_Funds_Under_Liberalised_Remittance_Scheme_Regulations\"><\/span>Process For Remitting Funds Under Liberalised Remittance Scheme Regulations<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">So, how do you transfer money under LRS?<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Well, the Reserve Bank of India indicates that only resident individuals can make remittances via Authorised Dealers (AD).&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">These ADs must conduct due diligence to ensure that remittances do not breach any of the \u200b\u200bForeign Exchange Management Act Notifications as well as the rules defined under the Income Tax Act.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">They must also conduct a complete &#8216;Know Your Customer&#8217; process of the senders and ensure no violation of &#8216;Anti Money Laundering&#8217; rules before remitting funds to a foreign account.&nbsp;<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>An applicant must furnish an application cum declaration to the AD that contains the following details:&nbsp;<\/li>\n<\/ol>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Applicant name<\/li>\n\n\n\n<li>Name of Authorised Dealer\u2019s branch&nbsp;<\/li>\n\n\n\n<li>Receivers and Foreign Bank\u2019s details&nbsp;<\/li>\n\n\n\n<li>Purpose, its code, and the amount that the sender is remitting sent abroad&nbsp;<\/li>\n\n\n\n<li>A self-declaration by the applicant stating that the amount that s\/he is sending via LRS does not exceed the fiscal year limit<\/li>\n\n\n\n<li>A declaration stating that the sender will not use the funds for any of the purposes prohibited under LRS<\/li>\n<\/ul>\n\n\n\n<ol start=\"2\" class=\"wp-block-list\">\n<li>The applicant must have a valid PAN (Permanent Account Number)<\/li>\n\n\n\n<li>The applicant must designate a single AD branch via which s\/he would make all the remittances under LRS<\/li>\n\n\n\n<li>The application must submit a NOC in case they wish to make remittances through a different bank<\/li>\n\n\n\n<li>The applicant must submit the source of funds by providing prior bank statements\/IT returns which will help the AD banks verify details before making LRS remittances<\/li>\n<\/ol>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-prohibited-transactions-under-liberalised-remittance-scheme\"><span class=\"ez-toc-section\" id=\"Prohibited_Transactions_Under_Liberalised_Remittance_Scheme\"><\/span>Prohibited Transactions Under Liberalised Remittance Scheme?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The <a href=\"https:\/\/upload.indiacode.nic.in\/showfile?actid=AC_CEN_2_45_00004_199942_1517807323986&amp;type=rule&amp;filename=FEM%20(CAT)%20Rules.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Section-3<\/a> of the Amendment Rules, 2015 lists a number of prohibited transactions under Liberalised Remittance Scheme regulations.<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Remitting funds against prohibited activities such as margin trading, lottery wins, banned magazines, etc.<\/li>\n\n\n\n<li>Remitting funds to purchase Foreign Currency Convertible Bonds issued by Indian Companies in foreign secondary markets<\/li>\n\n\n\n<li>Remitting funds to trade in foreign exchange in the overseas market<\/li>\n\n\n\n<li>Sending Capital account remittances, directly or indirectly to nations that the government identifies as either the Financial Action Task Force (FATF) or the \u201cnon-cooperative countries and territories\u201d<\/li>\n\n\n\n<li>Likewise, directly\/indirectly sending funds to individuals and entities that have been identified as posing a significant threat to committing acts of terrorism&nbsp;<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-parting-words\"><span class=\"ez-toc-section\" id=\"Parting_Words\"><\/span>Parting Words<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The Liberalised Remittance Scheme defined by the Reserve Bank of India is a practical step in the right direction. Its comprehensive and structured system has significantly helped residents individuals living in India to easily send money abroad for various purposes. It has also removed all the hassle and ambiguities which existed before. The scheme has brought about a much-needed shape benefiting all the stakeholders involved in the remittance process.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Sending money abroad for studies, family or personal expenses? <a href=\"http:\/\/remitwise.in\/\" target=\"_blank\" rel=\"noreferrer noopener\">Remitwise.in<\/a> makes LRS remittances simple. <a href=\"https:\/\/www.remitwise.in\/\" target=\"_blank\" rel=\"noreferrer noopener\">Visit Remitwise<\/a><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-frequently-asked-questions\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1660925235376\"><strong class=\"schema-faq-question\">When Was The Liberalised Remittance Scheme Introduced?<\/strong> <p class=\"schema-faq-answer\">The Liberalised Remittance Scheme was introduced on February 4, 2004, by the Reserve Bank of India. It was launched on the recommendations of the Tarapore Committee to ease the way resident individuals could quickly as well as smoothly send funds abroad for various purposes including medical treatments, academics, and investments.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1660925255251\"><strong class=\"schema-faq-question\">What Are The Benefits Of Liberalised Remittance Scheme?<br\/><\/strong> <p class=\"schema-faq-answer\">The primary benefit of the Liberalised Remittance Scheme is that it enables all resident individuals, including minors, to freely and easily send money abroad up to a limit of USD 2,50,000 per financial year. This amount can be used for any of the permissible transactions &#8211; current, capital, or a combination of both.\u00a0<br\/>Moreover, resident individuals can make use of foreign exchange facilities for various purposes. Refer to our section \u201cRemittance Purposes Defined Under LRS\u201d above for more information.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1660925549515\"><strong class=\"schema-faq-question\">Who Is Eligible For Liberalised Remittance Scheme?<\/strong> <p class=\"schema-faq-answer\">All resident individuals can avail the benefits of the Liberalised Remittance Scheme. The individual must be a resident of India as per the Foreign Exchange Management Act, 1999 irrespective of whether or not they are an Indian citizen.\u00a0<br\/>However, corporates, partnership firms, HUF, Trusts, etc., cannot take advantage of the Liberalised Remittance Scheme.\u00a0<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1660925570928\"><strong class=\"schema-faq-question\">Do I Have To Pay Taxes On Money Transferred From India To Overseas?<\/strong> <p class=\"schema-faq-answer\">As per the Financial Act, tax is collected at source at a fixed rate whenever a resident individual sends money outside India under the Liberalised Remittance Scheme.\u00a0<br\/>Here\u2019s everything you need to know.<br\/>&#8211; TCS on remittances under LRS for education fees and also medical purposes are tax-exempt up to INR 7 Lakhs<br\/>&#8211; In the case of education as well as medical-related foreign remittances, a TCS of 0.5% is applicable on any amount that exceeds INR 7 Lakhs<br\/>&#8211; A TCS (tax collected at source) of 20% will be applicable to all foreign remittances including foreign tour packages without any threshold limit<br\/>&#8211; In the case a resident individual has already paid tax as TDS (Tax deducted at source) and still TCS is levied, they are eligible to claim a refund for TCS<br\/>&#8211; Resident individuals can remit up to USD 2,50,000 per financial year in numerous batches<br\/>&#8211; Non-Resident Indians (NRIs) can also transfer up to USD 1 million per financial year from their NRO account to NRE or foreign account<br\/>&#8211; Any remittance that exceeded the ordered yearly limit will require special permission from the Reserve Bank of India<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1660925602896\"><strong class=\"schema-faq-question\">Can Banks Open Foreign Currency Accounts In India For Residents Under The Liberalised Remittance Scheme?<\/strong> <p class=\"schema-faq-answer\">No. As of date, the Reserve Bank of India does not authorise banks to open foreign currency accounts in India for residents under the Liberalised Remittance Scheme.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1660925622590\"><strong class=\"schema-faq-question\">Can The Liberalised Remittance Scheme Be Used To Acquire ESOPs?<\/strong> <p class=\"schema-faq-answer\">Yes. According to the guidelines stated by the Reserve Bank of India, the Liberalised Remittance Scheme can also be used to remit funds to acquire ESOPs. The scheme is also applicable to the acquisition of ESOPs linked to ADR\/GDR and qualification shares.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1660925680727\"><strong class=\"schema-faq-question\">Does The Liberalised Remittance Scheme Regulations Fall Under FEMA?<\/strong> <p class=\"schema-faq-answer\">Yes, the Liberalised Remittance Scheme regulations are part of the Foreign Exchange Management Act 1999 (FEMA) governed by the Reserve Bank of India.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>A few years ago, sending money to a foreign nation for various purposes such as education, medical emergencies, etc. was a cumbersome, tiring, and time-consuming process. There was no structured or proper way to securely and safely send money internationally. So, to streamline outward remittances of such funds, the Reserve Bank of India introduced the<\/p>\n","protected":false},"author":29,"featured_media":11860,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_themeisle_gutenberg_block_has_review":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_wpcom_ai_launchpad_first_post":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1],"tags":[],"class_list":["post-11847","post","type-post","status-publish","format-standard","has-post-thumbnail","category-all"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO 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It was launched on the recommendations of the Tarapore Committee to ease the way resident individuals could quickly as well as smoothly send funds abroad for various purposes including medical treatments, academics, and investments.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925255251","position":2,"url":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925255251","name":"What Are The Benefits Of Liberalised Remittance Scheme?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"The primary benefit of the Liberalised Remittance Scheme is that it enables all resident individuals, including minors, to freely and easily send money abroad up to a limit of USD 2,50,000 per financial year. This amount can be used for any of the permissible transactions - current, capital, or a combination of both.\u00a0<br\/>Moreover, resident individuals can make use of foreign exchange facilities for various purposes. Refer to our section \u201cRemittance Purposes Defined Under LRS\u201d above for more information.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925549515","position":3,"url":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925549515","name":"Who Is Eligible For Liberalised Remittance Scheme?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"All resident individuals can avail the benefits of the Liberalised Remittance Scheme. The individual must be a resident of India as per the Foreign Exchange Management Act, 1999 irrespective of whether or not they are an Indian citizen.\u00a0<br\/>However, corporates, partnership firms, HUF, Trusts, etc., cannot take advantage of the Liberalised Remittance Scheme.\u00a0","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925570928","position":4,"url":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925570928","name":"Do I Have To Pay Taxes On Money Transferred From India To Overseas?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"As per the Financial Act, tax is collected at source at a fixed rate whenever a resident individual sends money outside India under the Liberalised Remittance Scheme.\u00a0<br\/>Here\u2019s everything you need to know.<br\/>- TCS on remittances under LRS for education fees and also medical purposes are tax-exempt up to INR 7 Lakhs<br\/>- In the case of education as well as medical-related foreign remittances, a TCS of 0.5% is applicable on any amount that exceeds INR 7 Lakhs<br\/>- A TCS (tax collected at source) of 20% will be applicable to all foreign remittances including foreign tour packages without any threshold limit<br\/>- In the case a resident individual has already paid tax as TDS (Tax deducted at source) and still TCS is levied, they are eligible to claim a refund for TCS<br\/>- Resident individuals can remit up to USD 2,50,000 per financial year in numerous batches<br\/>- Non-Resident Indians (NRIs) can also transfer up to USD 1 million per financial year from their NRO account to NRE or foreign account<br\/>- Any remittance that exceeded the ordered yearly limit will require special permission from the Reserve Bank of India","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925602896","position":5,"url":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925602896","name":"Can Banks Open Foreign Currency Accounts In India For Residents Under The Liberalised Remittance Scheme?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"No. As of date, the Reserve Bank of India does not authorise banks to open foreign currency accounts in India for residents under the Liberalised Remittance Scheme.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925622590","position":6,"url":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925622590","name":"Can The Liberalised Remittance Scheme Be Used To Acquire ESOPs?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Yes. According to the guidelines stated by the Reserve Bank of India, the Liberalised Remittance Scheme can also be used to remit funds to acquire ESOPs. The scheme is also applicable to the acquisition of ESOPs linked to ADR\/GDR and qualification shares.","inLanguage":"en-US"},"inLanguage":"en-US"},{"@type":"Question","@id":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925680727","position":7,"url":"https:\/\/www.cashfree.com\/blog\/liberalised-remittance-scheme\/#faq-question-1660925680727","name":"Does The Liberalised Remittance Scheme Regulations Fall Under FEMA?","answerCount":1,"acceptedAnswer":{"@type":"Answer","text":"Yes, the Liberalised Remittance Scheme regulations are part of the Foreign Exchange Management Act 1999 (FEMA) governed by the Reserve Bank of India.","inLanguage":"en-US"},"inLanguage":"en-US"}]}},"jetpack_sharing_enabled":true,"jetpack_shortlink":"https:\/\/wp.me\/p9MjXo-355","jetpack_likes_enabled":false,"jetpack_featured_media_url":"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2022\/08\/Liberalised-remittance-scheme2.png?fit=1200%2C800&ssl=1","_links":{"self":[{"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/posts\/11847","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/users\/29"}],"replies":[{"embeddable":true,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/comments?post=11847"}],"version-history":[{"count":23,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/posts\/11847\/revisions"}],"predecessor-version":[{"id":34283,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/posts\/11847\/revisions\/34283"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/media\/11860"}],"wp:attachment":[{"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/media?parent=11847"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/categories?post=11847"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogrevamp.cashfree.com\/wp-json\/wp\/v2\/tags?post=11847"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}