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For Indians who regularly send money abroad, the Liberalised Remittance Scheme streamlines the process to ensure that funds are transferred in compliance with regulations.
Whether you need to transfer funds for education, medical treatments or investment, it is important what Liberalized Remittance Scheme is and how it works.
Introduced in 2004 by the Reserve Bank of India (RBI), the Liberalised Remittance Scheme (LRS) allows individuals to remit abroad with amounts up to USD 250,000. The scheme was designed to make cross-border transactions more convenient. The LRS scheme is regulated by the Foreign Exchange Management Act (FEMA), 1999.
The Liberalised Remittance Scheme (LRS) enables resident Indians to send money abroad within the specified limit. This scheme provides a few key advantages for money transfers to Indian residents:
The eligibility criteria for the LRS scheme are minimal. To ensure financial inclusion in terms of remittance transfers abroad:
However, corporate, partnership and HUF firms are not eligible under this scheme. NRIs also cannot avail this scheme when sending money to India.
For individuals planning to use the LRS scheme for remittance, it’s important to consider the limitations applicable under this scheme:
Under the Liberalised Remittance Scheme (LRS), resident individuals are not allowed to remit funds abroad for the following purposes:
By being aware of these limitations, one can avoid any penalties or other issues while transferring funds abroad. It is important to keep yourself updated on the latest RBI guidelines for LRS.
When factoring in the costs of sending money abroad, it is important to consider the taxation applicable to the LRS scheme. Refer to the table below for a quick overview:
Purpose of Remittance
TCS Rate (Above ₹10 lakh/year)
Education (from education loan)
Education (not from loan) & Medical Treatment
5%
All Other Purposes (travel, investment, etc.)
20%
Notes:
Remittance under the LRS scheme is an easy process for resident individuals. Here is a step-by-step guide for LRS:
Step 1: Select a service or bank that accepts LRS payments such as DBS Treasures Remittance services which offer a paperless process for sending money abroad.
Step 2: Provide mandatory documents which are a PAN card, a valid Indian passport, and proof of purpose (if required by the bank).
Step 3: Submit Form A2 which declares the purpose of your remittance and verifies it according to the RBI guidelines.
Step 4: Provide Remittance details such as the purpose of transfer, receiver’s name, bank account details, and country and the amount to be sent.
Step 5: After applying, the bank will review and process the transaction to the beneficiary.
It is essential to retain all receipts and confirmations that can assist in tracking the LRS application status.
Here are some recent changes in regulations for the Liberalized Remittance Scheme:
Also Read: Changes in LRS
The Liberalised Remittance Scheme empowers Indian residents to send up to USD 250,000 abroad annually for education, healthcare, investments, and more without cumbersome approvals. By understanding eligibility, limits, tax rules, and prohibited uses, individuals can transfer funds confidently and compliantly, making global opportunities accessible while staying within RBI’s regulatory framework.
DBS Treasures Remittance services let you send up to USD 250,000 abroad annually with zero bank fees, competitive FX rates, and same-day, paperless transfers to over 200 countries, making international money transfers fast, easy, and cost-effective for Indian residents.
If you are an Indian living abroad, opening an NRI account with DBS can further simplify global banking, offering seamless fund transfers and better management of your overseas income and investments.
