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Liberalised Remittance
Scheme

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What Is LRS Remittance?

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.

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What are the Benefits of LRS Remittance?

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What are the Eligibility Criteria for LRS?

01

Resident
individual

02

Minors are eligible too (via a guardian)

03

Individuals with a Valid PAN card

04

A sole proprietor (treated as an extension of the individual by RBI)

What Documents are Required for LRS Remittance?

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)

Taxation rules under the LRS Scheme

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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.)

FAQs

You Asked, We Answered!

The Liberalised Remittance Scheme, or LRS scheme, was introduced by the Reserve Bank of India in 2004 to make foreign remittances easier for resident Indians. It allows individuals to send money abroad for various personal and financial needs legally.

No, LRS is designed only for outward remittances—sending money from India abroad. For receiving foreign funds in India, other RBI inward remittance rules apply.

Resident individuals can remit up to USD 250,000 per financial year under LRS. This limit includes all purposes like education, travel, investments, and family support combined.

The maximum remittance allowed is USD 250,000 per individual in one financial year. Once this limit is reached, no further remittance can be made under LRS until the next year.

LRS cannot be used for gambling, betting, speculative trading, or prohibited crypto activities. Transfers to countries flagged as high-risk by FATF, and other LRS restricted transactions also exist.

LRS was created to give Indians easier access to investments, global education, travel, and other purposes. It ensures international transactions happen in a regulated and transparent manner.