Open a DBS Bank Account Now
Understand the benefits, rules, and regulations of LRS
The LRS full form is the Liberalised Remittance Scheme. The LRS meaning refers to a framework introduced by the RBI that allows resident Indians to remit funds abroad for education, medical treatment, travel, investments, and other permitted purposes.
This article explains what is LRS, how it works, the rules to follow, and which transactions are allowed or prohibited, helping you make international transfers safely and within RBI guidelines.
The Liberalised Remittance Scheme is what enables parents to send money to their child studying abroad. This scheme is available to any resident individual (adult or minor).. The LRS is unavailable to corporates, partnership firms, HUF or Charitable Trusts. The scheme enlists authorised dealers such as banks to facilitate foreign exchange between resident Indians and their beneficiaries abroad. For every transaction under the Liberalised Remittance Scheme, you will have to provide your PAN.
With economic liberalisation in the 1990s, India opened her doors to the world. On the 4th of February, 2004, the RBI introduced the Liberalised Remittance Scheme. The LRS is a result of the Tarapore Committee's recommendations.
LRS is the reason why millions of Indians like you can support their families abroad or send money for other purposes around the world.
To initiate such transactions smoothly, it helps to open a bank account online with a trusted bank that provides remittance facilities.
As per RBI mandate the Liberalized Remittance Scheme (LRS) limit is USD 250,000 per individual in a financial year (April to March). The LRS scheme limit is applicable to all outward remittances combined under the scheme, including education, travel, medical treatment, gifts, donations, overseas investments, and business purposes
The LRS includes a comprehensive list of purposes for which you can remit funds. The list is different for current account transactions and capital account transactions:
Many of these transactions can be managed directly through your savings account, making international transfers simpler and faster.
There is no restriction on the number of transactions. However, you must maintain a capital account for at least one year before your first remittance.
Aadhar Card + PAN Card + Video KYC = Account opened!
As per the latest RBI guidelines, the following remittances are prohibited under the LRS:
All remittances made under the Liberalised Remittance Scheme are subject to Tax Collected at Source (TCS) under Section 206C(1G) of the Income Tax Act. The applicable rates depend on the purpose and the total amount remitted in a financial year:
TCS is collected by the bank at the time of remittance, and the taxpayer can claim credit for it while filing their Income Tax Return (ITR). It is important to note that the LRS limit and the TCS rules work independently.
For resident Indians, the LRS scheme provides a legal and structured framework for sending money abroad. Here are some key benefits of this remittance scheme:
The Liberalised Remittance Scheme provides a structured and legal framework for sending money abroad. It simplifies foreign transactions, ensures compliance with RBI rules, and allows resident individuals to diversify investments internationally. LRS gives residents access to global financial markets while maintaining transparency and monitoring of foreign exchange transactions.
The Liberalised Remittance Scheme applies to only Indian residents living in the country. While an NRI can hold a bank account in India, the remittance rules will differ.
An NRI can hold any of the following types of bank accounts in India:
The Liberalised Remittance Scheme (LRS) applies only to resident individuals. NRIs are not covered under LRS; however, an NRI can remit up to USD 1,000,000 per financial year from their NRO account, subject to RBI guidelines.
There are specific terms and conditions laid down by the RBI regarding NRI bank account in India. It is best to check the latest guidelines before proceeding to make remittances from such accounts.
The Reserve Bank of India (RBI) regulates all outward remittances to ensure compliance with the Foreign Exchange Management Act (FEMA). Key guidelines include:
The Liberalised Remittance Scheme provides an extensive and structured system for resident individuals who wish to remit money overseas. You can send money to your loved ones abroad or for other transactions the RBI allows. Remember to keep your PAN card information ready, since it is mandatory.
Combine the benefits of international remittance with attractive returns by opening a DBS Bank Highest Interest Rate Savings Account, set up entirely online in minutes.
