Resident Individuals’ Guide to Overseas Remittances: LRS Rules and Regulations
Background: Introduced by the RBI in 2004 to facilitate residents in remitting funds abroad through their NRI accounts.
Eligibility: Available to all resident individuals, including minors. Not available to corporates, HUFs, trusts, etc.
Current Limit:
USD 250,000 per resident individual (RI) per financial year (FY) for current or capital account transactions. A family of four can remit up to USD 1,000,000 annually. Exceeding this limit requires RBI approval, except for some exceptional cases.
Permissible Transactions:
- Current Account: Private visits (except to Nepal/Bhutan), gifts, medical treatment, studies, maintenance of relatives, etc.
- Capital Account: Foreign currency accounts, property purchases, investments, setting up businesses, loans to NRIs/PIOs who are close relatives. To manage these transactions effectively, it’s advisable to maintain a foreign currency non-resident account or an FCNR account in India.
Exceptions to the Limit: For emigration, medical treatment, and studies, higher remittances are allowed under specific conditions.
Prohibited Uses: Margin trading, lotteries, foreign exchange trading, remittances to FATF-blacklisted countries, terrorism-related entities, or gifting to another RI's foreign account.
Procedure and Compliance:
Remittances must go through a designated AD bank. Form A2 and PAN are mandatory. The RI must have had an account with the AD bank for at least one year for capital transactions. For a smooth process, ensure that your NRI online account opening has been completed correctly.
General Guidelines:
- No restriction on frequency, but the total must be within the annual limit.
- Remittances should come from personal funds, not borrowed ones.
- Non-permanent residents in India can remit up to their net salary.
For smooth and secure remittances, it’s crucial to choose one of the best NRI banks in India for your NRI account opening online process. Many NRI account benefits in India can be accessed with the right bank, including options like FCNR deposit for stable returns.
Also Read: Thinking of Moving abroad for permanent settlement, Here is a checklist of points to be noted.