LRS or Liberalised Remittance Scheme is a foreign exchange policy that allows Indian residents to remit (send or transfer) money outside India up to a certain limit – i.e., USD 250,000 each financial year.
This remittance under LRS was started by the RBI (Reserve Bank of India) in 2004. The sole purpose of LRS was to simplify and standardize the process of sending money abroad from India. LRS remittance can be for various purposes under the purpose codes mentioned in the circular.
Resident
individual
Minors are eligible too (via a guardian)
Individuals with a Valid PAN card
A sole proprietor (treated as an extension of the individual by RBI)
Banks often request these documents to process LRS remittances.
Form A2
KYC documents
Proof of Identity (Aadhar card, PAN card)
Proof of Address (utility bills like electricity, phone, or water bills)
Bank-related (cancelled cheque and bank account details)
Proof of Income (income certificate from a CA - Chartered Accountant)
Under the Liberalised Remittance Scheme (LRS), TCS (Tax Collected at Source) applies only when your total foreign remittance crosses ₹10 lakh in a financial year.
It means:
• No TCS applies on remittances up to ₹10 lakh (earlier ₹7 lakh)
• 20% TCS applicable on amounts above ₹10 lakh for foreign investments and overseas travel.
(Note: LRS allows higher overall remittance limits, but TCS starts only after ₹10 lakh.)
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