What is Liberalised Remittance Scheme (LRS)?

The Liberalised Remittance Scheme (LRS) is a foreign exchange policy introduced by the Reserve Bank of India (RBI) in 2004 under the Foreign Exchange Management Act (FEMA), 1999. It allows resident individuals in India, including minors, to freely remit up to USD 250,000 per financial year (April to March) for permissible current or capital account transactions, or a combination of both. The scheme simplifies cross-border transactions while ensuring compliance with regulatory guidelines.

Key Features of the LRS:

Purpose:

• The LRS was designed to ease restrictions on foreign exchange transactions, enabling Indian residents to send money abroad for various purposes like education, travel, investments, medical treatment, and gifting.
• It promotes financial inclusivity by allowing access to global opportunities.

Eligibility:

Resident individuals (as defined under FEMA, 1999), including minors (through guardians), are eligible.

Non-eligible entities: Corporations, partnership firms, Hindu Undivided Family (HUF), and trusts cannot use LRS.

Non-Resident Indians (NRIs) are not eligible, as they cannot maintain savings accounts in India. However, NRIs can transfer funds from NRO (up to USD 10,000), NRE, or FCNR accounts under separate regulations.

Remittance Limit:

1. • Up to USD 250,000 per financial year per individual.
   • The limit applies to all transactions combined, tracked via the individual’s Permanent Account Number (PAN).