Liberalized Remittance Scheme: The Liberalized Remittance Scheme (LRS) is a scheme introduced by the Reserve Bank of India (RBI) that allows resident individuals in India to remit a certain amount of money abroad for permissible transactions without seeking prior approval from the RBI. The scheme was launched in 2004 to facilitate greater flexibility and ease of foreign exchange transactions for individuals. The scheme was introduced in order to promote international trade and investment, as well as to facilitate capital flows into and out of India.
What is Liberalized Remittance Scheme?
The LRS is a popular scheme among Indian residents who need to remit funds abroad for various purposes. The scheme is easy to use and there are no restrictions on the frequency or number of transactions. However, there are some prohibited purposes for which funds cannot be remitted under the LRS.
If you are a resident individual in India and you need to remit funds abroad, you can do so under the LRS. You can apply for an LRS remittance at any authorized dealer in India. The authorized dealer will need to verify your identity and purpose for remitting the funds. Once your application is approved, you will be able to remit the funds to the recipient abroad.
- The LRS limit is USD 250,000 per financial year
Purpose of the LRS scheme
The LRS aims to facilitate current and capital account transactions for resident individuals. It allows them to diversify their investment portfolio, acquire assets abroad, undertake education or medical treatment abroad, travel, gift funds to relatives outside India, and more.
The LRS scheme is not available for any firm, corporate business, trust, or Hindu undivided family (HUF).
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What are the 2023 updates on Liberalized Remittance Scheme?
Now, expenses incurred in foreign currency through international credit cards will come under the purview of the Reserve Bank of India’s Liberalized Remittance Scheme (LRS). Previously, expenses made through credit cards were not included within the scope of LRS.
Official Website: RBI Official