LRS Scheme Limit: A Complete Guide for Indian Residents

The Liberalised Remittance Scheme (LRS) introduced by the Reserve Bank of India (RBI) allows resident individuals in India to freely remit money abroad for permitted current or capital account transactions. If you’re planning to send funds abroad for education, travel, investment, or gift transfers, understanding the LRS scheme limit is crucial.

What Is the LRS Scheme?

The Liberalised Remittance Scheme (LRS) was introduced in 2004 by the RBI to simplify foreign remittance for resident Indians. It lays down the guidelines under which individuals can send money abroad without needing prior approval from the central bank, as long as the transaction falls within permitted categories.

This scheme applies only to resident individuals and does not cover corporations, partnership firms, HUFs, or trusts.

LRS Scheme Limit for FY 2024-25

As per the latest guidelines, the LRS limit is USD 250,000 per financial year per individual. This is a cumulative limit across all permissible transactions and purposes.

In INR terms, the limit can vary depending on the exchange rate but typically falls in the range of ₹2 to ₹2.25 crore per person per year.

What Transactions Are Allowed Under LRS?

Under the LRS scheme, resident individuals can remit money abroad for several purposes, such as:

  • Education abroad (including tuition fees, accommodation)

  • Medical treatment outside India

  • International travel (personal/leisure)

  • Gifts or donations to persons abroad

  • Investment in foreign shares, property, or mutual funds

  • Maintenance of close relatives residing outside India

  • Emigration expenses

  • Business trips (for proprietors or freelancers)

Note: Transactions for activities like lottery tickets, prohibited magazines, margin trading, or real estate speculation are not allowed.

Is TCS Applicable on LRS Transactions?

Yes. Under the Finance Act, 2020 and its subsequent amendments, Tax Collected at Source (TCS) is applicable on LRS remittances exceeding a certain amount. As of FY 2023-24:

  • 5% TCS on foreign remittances (except for medical or educational purposes) above ₹7 lakh in a financial year.

  • 0.5% TCS for education loans (under Section 80E) above ₹7 lakh.

  • 20% TCS applies on overseas tour packages regardless of value.

TCS is adjustable against your income tax liability, so it’s not an extra cost, but you must factor it into your cash flow planning.

How to Remit Under LRS

To remit under LRS, you need to follow these steps:

  1. Choose a bank or financial institution authorised by the RBI.

  2. Fill and submit Form A2 with your bank declaring the purpose of remittance.

  3. Provide PAN card, valid ID/address proof, and supporting documents (invoice, admission letter, etc.).

  4. Your bank will verify compliance and process the transaction electronically.

Banks are also required to track the aggregate LRS transactions per PAN to ensure the USD 250,000 limit isn’t breached.

Important Points to Remember

  • Limit is cumulative: All outward remittances under LRS in a financial year are counted together.

  • Joint remittances are not allowed: Each individual must remit separately under their own USD 250,000 limit.

  • Under FEMA regulations, certain transactions may still require RBI approval, even if under LRS.

Recent Updates and Considerations

  • Tightened monitoring: RBI and banks have ramped up scrutiny to prevent misuse of LRS for money laundering.

  • Mandatory PAN linking: Every LRS transaction must be linked to the PAN for centralized tracking.

  • Banks may block remittances if supporting documents or tax disclosures are incomplete.

Conclusion

The LRS scheme limit provides resident individuals with the freedom to manage international expenses and investments in a structured and legally compliant way. Whether you’re sending money for your child’s education or planning to diversify your investments globally, staying informed about the LRS rules ensures smoother financial planning and avoids compliance issues.

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