The Liberalised Remittance Scheme (LRS) was introduced on 4 February 2004 and is governed today by the Master Direction , Liberalised Remittance Scheme (FED Master Direction No. 7/2015-16), read with the Foreign Exchange Management Act, 1999. Under the current framework, every resident individual, including minors, may remit up to USD 2,50,000 or its equivalent in each financial year (April–March) for any permissible current or capital account transaction, or a combination of both.
All LRS remittances are routed through banks acting as Authorised Dealer Category-I (AD-I). Money2Abroad is a remittance technology platform and is not itself an Authorised Dealer; our partner institutions hold the applicable Authorised Dealer / Full Fledged Money Changer authorisations and clear funds through AD-I scheduled banks. Customer money never sits on our balance sheet.
Who is eligible
- Every resident individual, as defined under FEMA Section 2(v), including minors (Form A2 to be countersigned by a natural guardian).
- The scheme is not available to corporates, partnership firms, HUFs, trusts, etc., for the purposes covered by LRS as a resident individual scheme.
- Remittances under LRS can be consolidated in respect of family members, subject to each individual complying with the terms and conditions of the Scheme.
- LRS facility is not available for remittances to Bhutan, Nepal, Mauritius and Pakistan; and to countries identified by the Financial Action Task Force (FATF) as non-cooperative jurisdictions.
Permissible current account transactions
Under Schedule III of the FEM (Current Account Transactions) Rules, 2000, the following are permitted under LRS within the USD 2,50,000 cap per financial year:
For studies abroad and medical treatment, an individual may avail of exchange facility for an amount in excess of the LRS limit if it is so required by the institution or hospital concerned, against documentary evidence.
Permissible capital account transactions
The following capital account transactions are permitted under LRS within the same USD 2,50,000 cap per financial year:
- Opening of foreign currency accounts with a bank outside India.
- Purchase of immovable property abroad.
- Investment abroad , acquisition and holding of shares of both listed and unlisted overseas company, or debt instruments; acquisition of qualification shares of an overseas company for holding the post of director; investment in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes.
- Setting up Wholly Owned Subsidiaries and Joint Ventures (with effect from August 5, 2013) outside India for bonafide business subject to the terms & conditions stipulated in Notification No. FEMA 263/RB-2013.
- Extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 2013.
What is prohibited
The following are prohibited under LRS, regardless of amount:
- Remittance for any purpose specifically prohibited under Schedule I (such as purchase of lottery tickets / sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of the FEM (Current Account Transactions) Rules, 2000.
- Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty.
- Remittances for purchase of Foreign Currency Convertible Bonds (FCCBs) issued by Indian companies in the overseas secondary market.
- Remittance for trading in foreign exchange abroad.
- Capital account remittances, directly or indirectly, to countries identified by the Financial Action Task Force (FATF) as "non-cooperative countries and territories", from time to time.
- Remittances, directly or indirectly, to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately to the banks.
Tax , TCS on LRS remittances
Section 206C(1G) of the Income-tax Act, 1961, levies Tax Collected at Source (TCS) on outward remittances under LRS. Rates applicable from 1 April 2025:
| Purpose | Threshold | TCS rate |
|---|---|---|
| Education funded by a loan from a financial institution (Section 80E) | Any amount | Nil |
| Education (self-funded) and medical treatment | Up to ₹10 lakh | Nil |
| Education (self-funded) and medical treatment | Above ₹10 lakh | 5% on the excess |
| Overseas tour programme package | Up to ₹10 lakh | 5% |
| Overseas tour programme package | Above ₹10 lakh | 20% on the excess |
| Any other LRS purpose | Up to ₹10 lakh | Nil |
| Any other LRS purpose | Above ₹10 lakh | 20% on the excess |
TCS is collected by the AD bank at the time of remittance and is credited to the remitter's PAN. It can be claimed against the remitter's income-tax liability. Use the TCS calculator to estimate the amount in advance.
Documents required
Every outward remittance under LRS requires the following:
- Form A2 , application-cum-declaration under FEMA for purchase / remittance of foreign exchange.
- LRS declaration confirming that cumulative remittances in the current financial year, including the present one, are within the USD 2,50,000 limit.
- PAN of the remitter (mandatory for all outward remittances under LRS, without exception).
- Valid passport of the remitter, and beneficiary details (name, address, bank account, SWIFT / IBAN).
- KYC with the AD bank for at least one year preceding the remittance. If the remitter is a new customer, AD bank shall carry out due diligence in accordance with KYC norms.
- Purpose-specific supporting documents (admission letter, hospital estimate, beneficiary proof, etc.) as required by the AD bank.
How Money2Abroad processes the remittance
- The remitter or their authorised agency raises the request with the LRS purpose code selected.
- KYC, PAN and supporting documents are uploaded; the workspace pre-fills Form A2 and the LRS declaration.
- The AD-I partner bank verifies LRS eligibility, applies GST on FX conversion and TCS under Section 206C(1G) where applicable, and locks the FX rate.
- Remitter pays via NEFT / RTGS or an approved online collection method.
- SWIFT remittance is initiated by the AD-I bank; SWIFT confirmation / GPI reference is returned to the workspace.
For pre-trade computation, see our GST calculator and TCS calculator.
Reference
- Master Direction No. 7/2015-16 , Liberalised Remittance Scheme (as amended).
- Foreign Exchange Management Act, 1999 (FEMA).
- FEM (Current Account Transactions) Rules, 2000 , Schedules I, II and III.
- FEM (Permissible Capital Account Transactions) Regulations, 2000.
- A.P. (DIR Series) Circular No. 24 dated June 03, 2014 , raising the LRS limit to USD 2,50,000.
- Income-tax Act, 1961, Section 206C(1G) , TCS on outward remittance under LRS.
This page is a working summary for general guidance and is not legal or tax advice. Regulators and the Income-tax Department revise rules from time to time; the AD bank's verification at the time of remittance is authoritative. For the latest text, refer to the relevant Master Direction and notifications.