Liberalized Remittance Scheme

LRS lets resident individuals, including minors, remit up to USD 250,000 per financial year abroad for any permitted current or capital account transaction, without needing prior RBI approval. It is not available to corporates, partnership firms, HUFs, or trusts. Anything above the limit needs specific RBI approval.

What LRS actually covers

Purpose	Key points
Private travel	All travel, hotel, and tour costs included; no restriction on number of trips
Gifts, rupee to a relative NRI	Credited to their NRO account, within LRS limit
Gifts, foreign currency abroad	Cannot be sent resident-to-resident into a foreign account
Donations	Up to the LRS limit, to an organisation outside India
Employment or emigration abroad	Up to USD 250,000 or the emigration country’s prescribed amount
Maintenance of relatives abroad	Up to LRS limit
Business trips	No restriction on number; employer-funded trips fall outside LRS entirely
Medical treatment abroad	Up to LRS limit without any estimate; more allowed with a doctor’s estimate
Studies abroad	Up to LRS limit without a university estimate; more allowed with one
Foreign currency account abroad	No RBI approval needed to open and hold one
Immovable property abroad	Family members can consolidate their individual limits for one purchase
Overseas Direct/Portfolio Investment	Per the 2022 Overseas Investment rules
Extending loans	Rupee loans to NRI relatives allowed under conditions; loans abroad practically not permitted

Consolidating within a family: for a joint purchase like foreign property, each family member can remit up to their own USD 250,000 limit and pool it into one acquisition, but for capital account items like a bank account or investment, this pooling only works if each contributing member is actually a co-owner of that account or investment.

Prohibited uses

Margin trading, lottery, buying FCCBs in the secondary market, trading foreign exchange abroad, and remittances to FATF-flagged non-cooperative jurisdictions or to individuals and entities RBI has separately flagged as terrorism risks.

The 180-day rule, this is the part people miss

Since an August 2022 amendment, you can no longer indefinitely park unused LRS funds abroad or hold onto income earned on them. Any unused, unspent foreign exchange, or income realized from an LRS investment, must be repatriated or reinvested within 180 days of receipt or realization, whichever applies.

• A plan to accumulate remittances across several years to fund one large future purchase (say, saving USD 250,000 a year for 3 years to buy property worth USD 750,000) may no longer work as intended
• Idle balances sitting in a foreign bank account or fixed deposit may not count as genuine investment, and could be required to come back within the 180 days
• You are now expected to maintain records of what you hold abroad and when each reinvestment happened

Given the complexity, if you’re planning multi-year remittances for a future purchase, it’s worth checking with your bank and getting professional advice before you start, rather than assuming the old flexibility still applies.

Procedure and other essentials

• You designate one AD Bank branch for all your LRS remittances that year
• For a capital account transaction, you need to have held your account with that bank for at least 1 year before remitting
• Form A2 must be filed declaring the purpose, countersigned by a natural guardian if the remitter is a minor
• PAN is mandatory for every LRS remittance, no exceptions
• Borrowed funds generally cannot be remitted for a capital account transaction under LRS
• TCS applies on LRS remittances, the first ₹10 lakh in a year is exempt, with 20% TCS on the excess for investment-related transactions (this exemption threshold was raised from ₹7 lakh in a recent Budget)