What is the Liberalised Remittance Scheme (LRS)?

The Liberalised Remittance Scheme (LRS) is a policy introduced by the Reserve Bank of India (RBI) that allows Indian residents to send money abroad for specific purposes, such as education, travel, medical expenses, or investments, without requiring special approval each time. Under this rule, an individual can remit up to USD 2,50,000 in a single financial year (April to March). This limit applies to each person, not to families as a group. When the LRS started in 2004, the annual limit was only USD 25,000, but the RBI gradually increased this limit to give people.

Who Can Use the LRS?

The scheme is for residents in India. Any person living in India who meets the definition of a resident under Indian law is eligible to use it. Even minors (children) are eligible under this scheme, but their parents or legal guardians have to sign the required declaration and documents.

NOTE: Companies, partnership firms, trusts, and societies cannot use the LRS. It applies only to individuals.

What Can You Use the Money For?

The LRS allows money to be sent abroad for many legitimate and everyday needs. Some common uses include:

• Education abroad: To pay the tuition fees, hostel charges, or living expenses for studying overseas.
• Travel purposes: For holidays, business trips, or visiting family and friends in another country.
• Medical treatment: To pay for hospital expenses, surgery, or travel for medical reasons.
• Gifts and donations: To send money as a gift or charity to someone outside India.
• Employment and training: If you are taking a job or professional training abroad.
• Investment: To buy shares, property, or other permitted assets outside India.

However, not every kind of foreign payment is allowed. You cannot use the LRS to send money for things like lottery tickets, gambling, or trading on foreign stock exchanges in ways not permitted by law.

How Much Money Can You Send?

The maximum amount you can send under the LRS is USD 2,50,000 per financial year. You can send this in one go or in smaller parts throughout the year. Once you hit that limit, you must wait for the next financial year to make more transfers.

NOTE: The limit is per person, so if a family of four wants to send money, each member can use their individual limit of USD 2,50,000.

Why is the LRS Important?

The Liberalised Remittance Scheme gives Indian citizens the freedom to use their money internationally in a legal and easy way. It is important because:

• It gives flexibility: You can send money abroad without asking for special permission each time.
• It simplifies the process: Everything happens through your bank, making the process faster and transparent.
• It supports personal goals: Whether you are sending your child abroad for studies or investing in foreign stocks, LRS makes it possible.
• It prevents misuse: Since the money moves through authorised banks, it stays within the legal system and avoids unregulated transactions.

Important Rules to Remember

Before you send money abroad, you should keep a few basic things in mind:

1. The purpose must be allowed. You can only send money for uses that are listed as “permissible” under the LRS.
2. The annual limit is strict. Once you cross USD 2,50,000 in one financial year, you must wait until the next year.
3. Documents are required. You will need to submit forms, your PAN card, proof of identity, and other papers as required by your bank.
4. You must declare the purpose. You have to clearly mention why you are sending the money, whether it’s for education, travel, or investment.
5. Remittances to relatives: You can send money to close relatives abroad, but it must be done within the LRS limit and for genuine purposes.
6. Returns from investments: If you earn returns from your overseas investments, that money can be brought back to India as permitted by the RBI.

Step-by-Step Process to Send Money under LRS

1. Check eligibility: Make sure you are a resident individual under Indian law and have not crossed the LRS limit for the year.
2. Decide the purpose: Know exactly why you are sending the money. It must be a purpose allowed under the LRS.
3. Select your bank: Choose an authorised dealer bank (called an AD bank) that handles foreign exchange.
4. Fill the form: You’ll fill Form A2 and declare the purpose of the remittance.
5. Submit documents: Provide your PAN, ID proof, address proof, and any supporting papers like a university admission letter or medical bills.
6. Bank verification: The bank checks your documents, purpose, and available limit.
7. Payment and transfer: Once everything is approved, the bank sends the money abroad.
8. Track your usage: Keep a note of how much you have remitted under the LRS during the year.

Final Thoughts

The Liberalised Remittance Scheme is an important step that allows Indian citizens to manage their foreign exchange needs in a simple and safe way. With this scheme, you can send money abroad for genuine purposes like education, travel, medical treatment, or investment through authorised banks. The main thing is to stay within the annual limit, keep your documents ready, and make sure your purpose is allowed. If you follow the rules, LRS gives you full freedom to use your money wherever you need it, without unnecessary hassle.