Complete Guide to Liberalized Remittance Scheme - India 2026

Complete Guide to Liberalized Remittance Scheme - India 2026

Complete Guide to Liberalized Remittance Scheme - India 2026

Table of Contents

Background and Limits

The Liberalized Remittance Scheme (LRS) was introduced by the Reserve Bank of India (RBI) through A.P. (DIR Series) Circular No. 64 dated February 2004, with the objective of simplifying and liberalizing foreign exchange facilities available to resident individuals.

Under the LRS, resident individuals (RIs) are permitted to remit up to USD 250,000 per financial year (April–March) for any permitted current account transactions, capital account transactions, or a combination of both.

Any remittance exceeding USD 250,000 in a financial year requires prior approval from the RBI, except for certain specified transactions where such approval may not be necessary, as detailed separately.

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Eligibility

  • The scheme is available to resident individuals, including minors.

  • The scheme is not applicable to corporates, partnership firms, Hindu Undivided Families (HUFs), trusts, or other entities.

Permissible Transactions under LRS

Sr. No.PurposeNature of Transactions                     Conditions/ Points to be kept in mind
1.Private Visits -  AbroadCurrent Account
  • Private visits to countries other than to Nepal and Bhutan.
  • No Restriction on number of visits during the FY.
  • All tour related expenses including cost of transportation outside India and overseas hotel/ lodging expenses shall be included under the LRS limit.
  • Tour operator can collect this amount either in Indian rupees or in foreign currency from the resident traveler.
2.GiftCurrent AccountRupee Gift:
  • RI can make a rupee gift to an NRI/PIO (who is a relative* of RI) by way of crossed cheque/ electronic transfer.
  • Gift amount should be credited to NRO a/c ·of the recipient and
  • Gift amount should be within the LRS limit
  • It is the responsibility of the Resident donor to ensure all remittances made during the FY including the gift amount is not exceeding LRS limit.
  • Further one may check with the bank for applicability of TCS on above transaction as each bank has it's own set of policies.
Foreign currency Gift – Abroad:
RI can remit funds up to the LRS limit in one FY as Gift to any person resident outside India by transferring the funds directly to recipient’s overseas bank account
Note: RI cannot gift to another RI, in foreign currency for the credit of latter's foreign currency a/c held outside India. In simple terms, RI cannot transfer funds as gift to another resident Indian into his bank account outside India.
3.DonationCurrent AccountRI can remit funds up to the LRS limit in one FY as donation to an organization outside India
4.Going abroad for employmentCurrent AccountA person going abroad for employment may can draw up to USD 2,50,000/- per FY from any Authorized Dealer in India
5.EmigrationCurrent Account
  • RI wanting to emigrate can draw foreign exchange from AD Bank up to the amount prescribed by the country of emigration or USD 2,50,000/-.
  • Remittance outside India in excess of above limit allowed only towards meeting incidental expenses in the country of immigration and not for earning points or credits to become eligible for immigration by way of overseas investments in government bonds, land, commercial enterprises etc.
6.Maintenance of relatives* abroadCurrent Account A RI can remit up to LRS limit towards maintenance of relatives*
7.Business tripCurrent Account
  • Attending international conference, seminar, specialized training, apprentice training, etc. are treated as business visits.
  • No restriction on number of business trips to foreign countries undertaken during FY
  • However, if an employee is deputed by an entity and business trip related expenses of the employee are borne by such entity, such current account transactions shall be treated outside the purview of LRS limit and may be permitted without any limit subject to verification of bonafides of the transaction
8.Medical treatment outside IndiaCurrent Account
  • Remittance up to LRS limit is allowed without any estimate from doctor/hospital
  • For amount exceeding LRS limit, AD Bank can allow remittance based on an estimate from doctor in India or hospital/ doctor abroad, without RBI approval
  • A person who has fallen sick after proceeding abroad may also be released foreign exchange by an AD Bank (without prior RBI approval) for medical treatment outside India.
  • In addition to above, USD 2,50,000/- per FY is allowed to person for accompanying as attendant to a patient going abroad for medical treatment/ check-up.
9.Students pursuing studies outside IndiaCurrent Account
  • Remittance up to LRS limit is allowed without insisting on any estimate from a foreign university.
  • Remittance exceeding USD 2,50,000/ may be allowed (without prior RBI approval) based on an estimate received from a foreign university. 
10.Purchasing objects of artCurrent AccountIt is allowed subject to provisions of other applicable laws such as Extant Foreign Trade Policy of the Government of India.
11Any other current account transaction which are not prohibitedCurrent AccountPermissible to remit funds under LRS
12.Open, maintain and hold foreign currency a/c outside IndiaCapital Account
  • Prior approval of RBI is not required.
  • This account may be used for putting through all transactions connected with or arising from remittances eligible under LRS.
13.
 		Acquisition of immovable property abroad
 		Capital Account
 
  • RI can acquire immovable property abroad out of remittances sent under LRS
  •  Remittances made for acquiring property outside India can be consolidated in respect of family member/relatives. The same is explained with an example below:
  • Eg. A family consist of 4 members- Husband (Mr. A), wife (Mrs. A) and two children named (X) and (Y). They want to purchase an immovable property outside India for USD 10,00,000/- in the name of wife Mrs. A. Each family member can remit funds upto USD 2,50,000/- under LRS and same can be consolidated to acquire property in name of wife, Mrs. A.     
.14Overseas Direct Investment/ Overseas Portfolio InvestmentCapital AccountPermissible in accordance with provisions of-
a) Foreign Exchange Management (Overseas Investment) Rules, 2022,
b) Foreign Exchange Management (Overseas Investment) Regulations, 2022 and
c) Foreign Exchange Management (Overseas Investment) Directions, 2022.
15.Extending LoansCapital Account
  • Lending loan in India- Rupee Loan:
  • Loan can be given to NRI/ PIO relative*.
  • Mode of transfer should be crossed cheque/ electronic transfer and credited to NRO a/c of NRI/ PIO.
  • Loan amount shall not be remitted outside India.
  • Repayment of loan should be made by way of inward remittances through normal banking channels or debit to NRO/NRE/FCNR a/c of the borrower out of sale proceeds of shares/ securities/ immovable property against which loan was granted.
  • Loan should be free of interest and minimum maturity of the loan is one year.
  • Purpose of loan should be meeting borrower’s personal requirements or business purposes in India. It should not be utilized for activities in which investments by persons resident outside India is prohibited namely:
                 i.        Business of chit fund, or
                     ii.        Nidhi Company, or
                    iii.        Agricultural or plantation activities or in real estate business, or construction of farm houses, or
                   iv.        Trading in Transferable Development Rights (TDRs)
Extending loan outside India: It is suggested to approach Bank before undertaking remittance for loan transaction outside India. Practically, in our experience remittance of funds under LRS to extend loan outside India is not permitted.
16IFSCCapital AccountPermissible subject to fulfilment of specified conditions

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Definition of “Relative”

The term “relative” includes the following persons:

  1. Spouse

    • Husband

    • Wife

  2. Lineal and collateral relations, where one person is related to the other in any of the following ways:

    • Father (including step-father)

    • Mother (including step-mother)

    • Son (including step-son)

    • Son’s wife

    • Daughter

    • Daughter’s husband

    • Brother (including step-brother)

    • Sister (including step-sister)

Prohibited Transactions under LRS

The following remittances are not permitted under the Liberalised Remittance Scheme:

i. Remittances for prohibited activities such as margin trading, lottery, gambling, or similar activities
ii. Remittance for the purchase of Foreign Currency Convertible Bonds (FCCBs) issued by Indian companies in the overseas secondary market
iii. Remittance for trading in foreign exchange abroad
iv. Remittances made, directly or indirectly, to countries identified by the Financial Action Task Force (FATF) as “non-cooperative countries and territories”, as published on the FATF website or notified by the RBI from time to time
v. Remittances made, directly or indirectly, to individuals or entities identified as posing a significant risk of terrorism, as advised by the RBI to Authorized Dealer (AD) banks

Procedure for Remittance under LRS

To make a remittance under the LRS, the following procedure must be followed:

i. The resident individual (RI) must designate one Authorized Dealer (AD) bank branch, through which all LRS remittances for a particular financial year will be routed
ii. For capital account transactions, the RI must have maintained a bank account with the AD bank for at least one year prior to the remittance
iii. The RI is required to submit Form A2, specifying the purpose of remittance and declaring that the funds will not be used for any prohibited purpose. In case the remitter is a minor, Form A2 must be countersigned by the minor’s natural guardian
iv. PAN is mandatory for all remittances made under the LRS, irrespective of the nature of the transaction
v. The RI must submit additional supporting documents, as may be required by the AD bank

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Other Important Points

  • There is no restriction on the number of remittances that may be made under the LRS during a financial year, subject to the overall limit

  • For capital account transactions, remittances must be made out of the remitter’s own funds; in practice, remittance of borrowed funds is not permitted. However, AD banks may extend credit facilities to facilitate remittances for permitted current account transactions

  • Remittances under LRS may be consolidated for family members. However, clubbing of limits for capital account transactions (such as opening overseas bank accounts or making investments in shares/securities) is permitted only where each remitter is a joint/co-owner of the overseas bank account or investment

  • Earlier, residents were permitted to retain and reinvest income earned abroad without any obligation to repatriate such income or funds. However, pursuant to the August 2022 amendment to the Master Direction on LRS, a resident individual is now required to repatriate and surrender any received, realized, unspent, or unused foreign exchange, unless reinvested, to an authorized person within 180 days, as applicable, from:

    • the date of receipt or realization, or

    • the date of purchase or acquisition, or

    • the date of return to India

Key Implications of the August 2022 Amendment (Illustrative)

On a plain reading, the following key changes emerge:

  • Funds remitted under LRS must be utilized within 180 days, failing which they must be repatriated to India

  • Income earned abroad must also be repatriated unless reinvested within 180 days

  • Accumulation of funds for future planned investments (e.g., remitting USD 250,000 over multiple financial years to acquire immovable property at a later stage) may no longer enjoy the same flexibility

  • Balances maintained in overseas bank accounts or fixed deposits may not qualify as “investment” and could be required to be repatriated

  • Resident individuals may now be required to maintain detailed records of overseas assets, investments, reinvestments, and corresponding timelines

Advisory Note

Given the complexity of the LRS provisions and their evolving interpretation, it is advisable to consult the Authorized Dealer bank and seek professional advice prior to making any remittance under the LRS.

Tax Collection at Source (TCS)

Tax is Collected at Source (TCS) on remittances made under the LRS. Please refer to FAQ No. 3 under TCS on LRS and purchase of Overseas Tour Program Packages for further details.

CA Mitesh and Associates is India's leading CA Firm Firm with special focus on accurate NRI Income Tax Return filing , Handling Income Tax Notices and Repatriation and Remittance under LRS in India.                                                                                                                                                                                                            Contact us via WhatsApp: Click Here  or Email: info@mnpartners.in

FAQ – Liberalised Remittance Scheme (LRS)

1. What is the Liberalised Remittance Scheme (LRS)?

Ans.
The Liberalised Remittance Scheme (LRS) is a facility introduced by the Reserve Bank of India (RBI) to simplify and liberalise outward remittances by Resident Individuals (RIs). Under this scheme, a resident individual can remit up to USD 250,000 per financial year (April–March) for permitted current account transactions, capital account transactions, or a combination of both, without prior RBI approval.

2. Who is eligible to remit funds under LRS?

Ans.

  • The scheme is available to all resident individuals, including minors, as defined under FEMA.

  • LRS is not available to corporates, partnership firms, HUFs, trusts, or any other non-individual entities.

3. What current account transactions are permitted under LRS?

Ans.
Permissible current account transactions include:

  • Private visits abroad (except Nepal and Bhutan)

  • Gifts or donations (including rupee gifts to NRI/PIO close relatives, subject to conditions)

  • Employment-related travel abroad

  • Emigration

  • Maintenance of close relatives abroad

  • Business travel, conferences, or specialised training

  • Medical treatment and check-ups abroad (including attendant expenses)

  • Studies abroad

  • Any other current account transaction not specifically prohibited

4. Which capital account transactions are permitted under LRS?

Ans.
Permissible capital account transactions include:

  • Opening foreign currency bank accounts abroad

  • Acquisition of immovable property outside India in accordance with Overseas Investment Rules, 2022

  • Overseas Direct Investment (ODI) and Overseas Portfolio Investment (OPI), subject to FEMA regulations

  • Loans (including INR loans) to NRI/PIO close relatives, subject to prescribed conditions

5. Can banks open foreign currency accounts in India under LRS?

Ans.
No. Banks are not permitted to open foreign currency accounts in India under LRS.

6. Can residents open foreign currency accounts abroad under LRS?

Ans.
Yes. Resident individuals may open foreign currency accounts outside India under LRS without prior RBI approval.

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7. Can remittances exceed USD 250,000?

Ans.
Yes, for emigration, medical treatment, and overseas education, subject to documentary requirements of the destination country, medical institution, or university.
For all other transactions, prior RBI approval is required to remit amounts exceeding USD 250,000.

8. Are remittances restricted to US Dollars only?

Ans.
No. Remittances can be made in any freely convertible foreign currency.

9. Is LRS in addition to usage of international credit cards?

Ans.
Yes. LRS is in addition to international credit card usage. There is no RBI-prescribed monetary ceiling for credit card expenses incurred abroad (except prohibited transactions).
Use of international credit cards in Nepal and Bhutan is not permitted.

10. Is LRS in addition to usage of international debit cards?

Ans.
No. International debit card usage is counted within the LRS limit. Debit card usage in Nepal and Bhutan is not permitted.

11. Is there any restriction on the number of remittances?

Ans.
No restriction on frequency or number of remittances during a financial year, provided the aggregate remittance does not exceed USD 250,000.

12. Can a minor remit funds under LRS?

Ans.
Yes. In such cases, Form A2 must be countersigned by the minor’s natural guardian.

13. Is Indian citizenship mandatory to avail LRS?

Ans.
No. A foreign passport holder residing and conducting business in India is treated as a person resident in India under FEMA and is eligible for LRS.

14. Can an Indian citizen residing abroad avail LRS?

Ans.
No. An Indian citizen residing abroad for employment is treated as resident outside India and is not eligible for LRS.

15. Can LRS limits be consolidated among family members?

Ans.
Yes, subject to each member complying with LRS conditions.
However, clubbing is not permitted for capital account transactions unless all remitters are co-owners or joint holders of the overseas account or investment.

CA Mitesh and Associates is India's leading CA Firm Firm with special focus on accurate NRI Income Tax Return filing , Handling Income Tax Notices and Repatriation and Remittance under LRS in India.                                                                                                                                                                                                            Contact us via WhatsApp: Click Here  or Email: info@mnpartners.in

16. Is the AD bank required to verify the purpose of remittance?

Ans.
The AD bank relies on the declaration in Form A2. However, ultimate responsibility for compliance rests with the remitter.

17. Is PAN mandatory for LRS remittance?

Ans.
Yes. PAN is mandatory for all LRS transactions.

18. What transactions are not permitted under LRS?

Ans.
LRS does not permit:

  • Lottery, gambling, margin trading, or prohibited publications

  • Margin payments to overseas exchanges

  • Purchase of FCCBs of Indian companies in overseas secondary markets

  • Forex trading abroad

  • Capital account remittances to FATF non-cooperative jurisdictions

  • Transfers to terrorism-linked individuals/entities

  • Gifting foreign currency to another RI’s overseas bank account

19. Is repatriation of income earned abroad mandatory?

Ans.
Yes. Any unutilised, unrealised, or unused foreign exchange, unless reinvested, must be repatriated within 180 days. ODI investors must additionally comply with FEMA ODI regulations.

20. Gift Under LRS

  • Partial utilisation of USD 250,000 allows balance remittance within the same FY

  • Once the full limit is exhausted, no further remittance is allowed in that FY, even for maintenance

21. Gift-related illustrations

  • Partial utilisation of USD 250,000 allows balance remittance within the same FY

  • Once the full limit is exhausted, no further remittance is allowed in that FY, even for maintenance

22. Can an RI gift foreign currency to another RI abroad?

Ans.
No. Such transactions are not permitted under LRS.

23. What is the procedure to remit funds under LRS?

Ans.

  • Approach an AD bank

  • Maintain a minimum one-year banking relationship for capital account transactions

  • Submit Form A2 and supporting documents

  • Provide PAN

  • Declare funds are not borrowed and not for prohibited use

24. Who qualifies as “close relatives” for maintenance remittance?

Ans.
Relatives as defined under the Companies Act, including spouse, parents, children, siblings, and members of HUF.

25. Can income remittance exceed USD 250,000?

Ans.
Residents (not permanently resident in India) may approach RBI through their AD bank for approval to remit additional income beyond LRS limits.

CA Mitesh and Associates is India's leading CA Firm Firm with special focus on accurate NRI Income Tax Return filing , Handling Income Tax Notices and Repatriation and Remittance under LRS in India.                                                                                                                                                                                                            Contact us via WhatsApp: Click Here  or Email: info@mnpartners.in

26. Can banks provide loans for LRS remittance?

Ans.

  • Not permitted for capital account transactions

  • Permitted for current account transactions

27. Can a sole proprietor remit under LRS?

Ans.
Yes, but the individual limit applies. A proprietor cannot claim a separate limit for the business.

28. Is Rupee loans and gifts to NRI/PIO relatives

Ans.
Permitted via crossed cheque/electronic transfer, credited to NRO account, within the LRS limit.

29. Can an Individual give loan to NRI/PIO relatives

Ans.
Permitted via crossed cheque/electronic transfer, credited to NRO account, within the LRS limit.

30. Can remittance be made from borrowed funds?

Ans.
No. Remittances must be made from own funds only.

31. Are there investment quality restrictions under LRS?

Ans.
No. Investors must exercise personal due diligence.

32. Can spouses pool LRS funds abroad?

Ans.
No. Gifting foreign currency between RIs abroad is not permitted and may require repatriation.

33. Can LRS be used for EB-5 Visa investments?

Ans.
Only for incidental emigration expenses. Investment-linked immigration programs are not permitted under LRS.

34. Are remittances to Mauritius and Pakistan allowed?

Ans.
Yes, for permissible current account transactions, subject to FATF and RBI restrictions.

35. Is TCS applicable on LRS remittances?

Ans.
Yes. Tax Collected at Source (TCS) applies. Refer to FAQs on TCS on LRS and overseas tour packages for applicable rates.

CA Mitesh and Associates is India's leading CA Firm Firm with special focus on accurate NRI Income Tax Return filing , Handling Income Tax Notices and Repatriation and Remittance under LRS in India.                                                                                                                                                                                                            Contact us via WhatsApp: Click Here  or Email: info@mnpartners.in

Links for your reference

LRS RBI Website

Outward Remittances under the Liberalised Remittance Scheme (LRS) for Resident Individuals

Outward Remittances under the Liberalised Remittance Scheme (LRS) for NRIs

Step by Step Guidance to LRS

FEMA Rules for Sending Money Abroad from India

CA Mitesh and Associates is India's leading CA Firm Firm with special focus on accurate NRI Income Tax Return filing , Handling Income Tax Notices and Repatriation and Remittance under LRS in India.                                                                                                                                                                                                            Contact us via WhatsApp: Click Here  or Email: info@mnpartners.in

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