Liberalised Remittance Scheme (LRS)
Resident individuals can send up to USD 250,000 a year abroad without RBI approval. Here is how the scheme works at the branch.
The Liberalised Remittance Scheme (LRS) is the general permission under which a resident individual in India can send money abroad without asking RBI first. It covers both current account purposes, such as travel, education and gifts, and capital account purposes, such as buying shares or property abroad.
For an AD-branch officer, LRS is the most common outward remittance on the counter. CCFE tests it constantly: the limit, who qualifies, what the bank must collect, and the handful of uses the scheme does not cover.
You save ₹200 today
- 5 full-length mocks
- 553 questions, chapter by chapter
- Rate & risk calculations
One payment, no subscription · Valid for 2 months
LRS at a Glance
| Point | Current position |
|---|---|
| Limit | USD 250,000 per financial year (April-March), per individual |
| Who can use it | Resident individuals only, including minors |
| Who cannot | Corporates, partnership firms, HUFs, trusts and other non-individuals |
| Minors | Allowed; Form A2 must be countersigned by the minor's natural guardian |
| PAN | Mandatory for every LRS remittance |
| Application | Form A2, submitted to the AD bank |
| Bank credit | Banks may not lend to fund capital account remittances under LRS |
| Governing text | RBI Master Direction on LRS, read with the FEM (Current Account Transactions) Rules, 2000 |
How the USD 250,000 Limit Works
The ceiling is a single annual pool per person. Current and capital account remittances draw from the same USD 250,000, so a resident who pays USD 100,000 in foreign university fees in a year has USD 150,000 left for everything else that year. The limit resets on 1 April.
Family members can each use their own limit, which is why a family consolidating funds for a property abroad is a common branch scenario. Each member remits in their own name, under their own PAN and Form A2. For capital account purposes such as property, a bank account or an investment abroad, clubbing is allowed only where each remitting member is a co-owner or co-partner of it.
There is one carve-out on the current account side. Under Schedule III of the Current Account Transactions Rules, an individual may draw more than the LRS limit for emigration, medical treatment abroad or studies abroad, if the country of emigration, the medical institution or the university requires the higher amount.
What the AD Branch Does on an LRS Request
- 1
Confirm the remitter is a resident individual
LRS is not open to entities, and a non-resident does not use LRS at all; their outward flows run through NRE, FCNR(B) or the remittance-of-assets route.
- 2
Take Form A2 and PAN
Form A2 records the purpose and carries the remitter's declaration that the year's LRS remittances stay within the limit. PAN is mandatory.
- 3
Check the purpose is permitted
Screen it against Schedule I (prohibited) and Schedule II (Government approval needed) of the Current Account Transactions Rules, and the scheme's own exclusions.
- 4
Check the funds are the remitter's own
No bank credit may be extended to fund a capital account remittance under the scheme.
- 5
Collect TCS where applicable
Tax collected at source applies above a rupee threshold, at rates that depend on purpose. The bank collects it; the remitter claims credit in the tax return.
Limit, eligibility and Form A2 questions. No signup.
Rules That Follow the Money Abroad
- Foreign currency account abroad
- A resident may open, hold and maintain a foreign currency account with a bank outside India under LRS, without RBI's prior approval.
- Income on LRS investments
- Income earned on investments made under LRS may be retained and reinvested abroad.
- Unused funds
- Foreign exchange received, realised, unspent or unused must be repatriated and surrendered to an authorised person within 180 days unless reinvested.
- IFSC remittances
- LRS remittances can go to International Financial Services Centres in India, for financial products under the IFSCA Act, 2019 and for permitted transactions in other jurisdictions.
- Rupee gifts and loans to NRI relatives
- Not remitted abroad: credited to the relative's NRO account. A rupee loan must be interest-free with a minimum maturity of one year.
How CCFE Tests This
Expect direct recall (the limit, the financial-year basis, Form A2, PAN) and eligibility traps. The favourite wrong answers: that a partnership firm or HUF can use LRS, that minors are excluded, or that a bank can give an overdraft to fund an overseas investment. Read every option for the words 'resident individual'; most LRS questions turn on them.
FAQs
What is the LRS limit for 2026-27?expand_more
USD 250,000 per resident individual per financial year (April-March), covering current and capital account remittances together.
Can a minor send money abroad under LRS?expand_more
Yes. Minors are eligible, but the Form A2 must be countersigned by the minor's natural guardian.
Can a company or HUF use the Liberalised Remittance Scheme?expand_more
No. LRS is only for resident individuals. Corporates, partnership firms, HUFs and trusts remit under the rules that apply to them, not under LRS.
Is PAN mandatory for LRS remittances?expand_more
Yes. The Master Direction makes PAN mandatory for every remittance under the scheme.
Can I take a bank loan to invest abroad under LRS?expand_more
No. Banks may not extend any credit facility to a resident individual to fund capital account remittances under the scheme.
Next steps
- LRS Purposesarrow_forward
- TCS on Remittancearrow_forward
- Current Account Rulesarrow_forward
- FEMA & Trade Finance Conceptsarrow_forward
100 questions across all six modules, timed and scored.