What Are Liberalized Remittance Scheme (LRS) Limits?

The current limit under the Liberalized Remittance Scheme (LRS) is USD 250,000 per financial year (April to March) per individual resident. This limit applies to all permissible transactions, including travel, education, medical treatment, gifts, investments, and maintenance of close relatives abroad. The limit is set by the Reserve Bank of India (RBI) under the Foreign Exchange Management Act (FEMA), 1999.

The limit is per person, not per family. For example, a family of four can remit up to USD 1,000,000 in a financial year if each member uses their individual limit. However, the remitter must be an Indian resident as defined under FEMA. Non-residents (NRIs) are not eligible to use LRS; they use other channels like their NRE/NRO accounts.

Under LRS, you can remit funds for:

• Current account transactions: Private travel, education fees, medical treatment, gifts, donations, and maintenance of relatives abroad.
• Capital account transactions: Investments in foreign stocks (directly or via mutual funds), real estate (subject to local laws), purchase of property, and setting up businesses abroad.

Prohibited transactions include:

• Remittances for activities banned under Indian law (e.g., gambling, lottery, or trading in prohibited derivatives).
• Remittances to countries or entities under UN sanctions.
• Any transaction that violates the laws of the host country.

For investments in foreign stocks or mutual funds, you must comply with the host country's securities regulations. For example, US SEC rules may apply if you invest in US markets.

For education and medical expenses, the LRS limit of USD 250,000 per financial year applies cumulatively to all remittances. However, there is a specific relaxation: for education fees, you can remit up to the limit without requiring prior RBI approval, provided the educational institution is recognized. For medical treatment, you can remit for treatment abroad or for purchasing medicines.

Important: If your education or medical expenses exceed USD 250,000 in a financial year, you must seek prior approval from the RBI through your Authorized Dealer (bank). The bank will assess the genuineness of the transaction and may require supporting documents like admission letters, medical reports, or invoices.

Remittances under LRS are subject to Tax Collected at Source (TCS) under Section 206C(1G) of the Income Tax Act, 1961. The current TCS rates (as of FY 2024-25) are:

• For education fees (financed by loan from a specified financial institution): 0.5% on amount exceeding INR 7 lakh.
• For education fees (self-financed): 5% on amount exceeding INR 7 lakh.
• For medical treatment: 5% on amount exceeding INR 7 lakh.
• For all other purposes (including investments, gifts, travel): 20% on amount exceeding INR 7 lakh.

The TCS is collected by the bank at the time of remittance. You can claim credit for this TCS against your total income tax liability when filing your return. If your total income is below the taxable limit, you may be eligible for a refund.

You must track your LRS usage across all banks and remittance channels. The RBI requires all Authorized Dealers (banks) to report LRS transactions to the RBI's online portal. However, the system does not automatically aggregate across multiple banks. To avoid exceeding the limit:

1. Maintain a personal record of all remittances under LRS in a financial year.
2. Use a single bank for all LRS transactions to simplify tracking.
3. Check with your bank before each remittance to confirm your remaining limit.
4. For investments, remember that the limit applies to the total amount remitted, not just the investment value. If you remit USD 250,000 for investments, you cannot remit any further amount for travel or education in the same year.

If you exceed the limit, the RBI may impose penalties under FEMA, including fines and restrictions on future remittances.

If you plan to remit funds under LRS, first confirm your total annual requirement and ensure it does not exceed USD 250,000. Consult your bank (Authorized Dealer) for the latest TCS rates and documentation requirements. For complex transactions like foreign investments or large education expenses, consult a qualified chartered accountant or FEMA consultant.

---

This page provides preliminary information. It is not legal advice. For your matter, consult a qualified professional.