Liberalized Remittance Scheme (LRS) by RBI: How Much and Where Can You Remit?
Liberalized Remittance Scheme (LRS) for NRIs
Background: Introduced by the RBI in 2004 to facilitate residents in remitting funds abroad.
Eligibility: Accessible 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.
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
- 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.
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.
Form 15CA CB for NRIs is an important requirement for ensuring compliance when making remittances under the LRS. The foreign remittance Form 15CA requirements and applicability of Form 15CA CB for NRIs must be followed for transparency. TDS on foreign remittance by NRIs is another crucial aspect to keep in mind. To make the process smoother, NRIs should be aware of how to file Form 15CB online for NRIs and understand 15CA CB exempted purpose codes. Form 15CA for foreign remittance is part of the due diligence needed to avoid penalties and ensure the validity of the remittance. NRIs must also be mindful of form 15ca and 15cb requirement for larger remittances to stay within the legal framework.
Also Read: Form 15CA/15CB Explained: When & Why NRIs Need It for Foreign Remittance