LIBERALISED REMITTANCE SCHEME (LRS)

Liberalised Remittance Scheme (LRS) was introduced on Feb 04, 2004 to facilitate Resident Individuals to remit funds abroad for permitted current or capital account transactions. The maximum permissible limit per individual is USD 250,000 a year and this amount can be consolidated for family members. 

Permissible Capital account transactions:

• Opening Foreign Currency account abroad
• Purchase of property abroad
• Making investments abroad
• Setting up WOS and JV abroad
• Extending loans to NRIs

The limit of USD 2,50,000 subsumes remittances for current account transactions viz.

• private visit; 
• gift/donation; 
• going abroad on employment;
• emigration; 
• maintenance of close relatives abroad; 
• business trip; 
• medical treatment abroad;
• studies abroad
• Any other current account transaction

LRS - Other important points 

• Objects of art can be purchased (as per Foreign Trade Policy)
• Remittances can be made to Foreign Currency accounts  opened abroad 
• No credit facilities allowed to facilitate capital account transactions
• No capital account  remittances to FATF NCCT countries
• Remittances through a designated branch of an Authorised Dealers
• PAN Card mandatory
• Income on investments abroad can be retained abroad.

The Scheme is not available for remittances for any purpose specifically prohibited under Schedule I or Schedule II of Foreign Exchange Management (Current Account Transaction) Rules, 2000, dated May 3, 2000, as amended from time to time.

Operational Instructions to Authorised Dealers (ADs) permitting remittances under LRS

1. ADs to be reasonably satisfied of the purpose. 
2. ADs may consider requirements of documents.
3. ADs to maintain records for RBI verification.
4. ADs to ensure proper KYC guidelines implemented. 
5. ADs to ensure funds belong to the remitter.
6. ADs to ensure that remittance is not made to ineligible entities.
7. No credit facilities to be extended for capital account transactions.
8. Reporting to be done in FETERS.

OTHER FOREIGN REMITTANCES

Remittance facilities for resident individuals (Currency Notes and Coins):

1. Travellers proceeding to Iraq or Libya can purchase foreign currency notes and coins- not exceeding USD 5000 per visit or its equivalent. 
2. Travellers proceeding to Iran, Russian Federation and CIS - full exchange may be released.
3. Any other countries - not exceeding USD 3000 per visit or its equivalent.
4. Travellers proceeding for Haj/Umrah pilgrimage- full amount of entitlement in cash or up to the cash limit as specified by the Haj Committee of India, may be released.

Remittance facilities for resident individuals

1. Resident Individuals are required to  surrender received / realised / unspent / unused foreign exchange to an Authorised Person within a period of 180 days from the date of receipt / realisation / purchase / acquisition / date of return of the traveller, as the case may be. 
2. A returning traveller is permitted to retain foreign currency, travellers’ cheques and currency notes up to an aggregate amount of USD 2000 and foreign coins without any ceiling beyond 180 days. 

Remittance Facilities for persons other than individuals

A  Resident Individual entity can remit funds abroad as per the stipulations below:-

(i) Donations up to one per cent of their foreign exchange earnings during the previous three financial years or USD 5,000,000, whichever is less, for-

• creation of Chairs in reputed educational institutes,
• contribution to funds (not being an investment fund) promoted by educational institutes; and
• contribution to a technical institution or body or association in the field of activity of the donor Company.

(ii) Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India up to USD 25,000 or 5% of the inward remittance whichever is more.

(iii) Remittances up to USD 10,000,000 per project for any consultancy services in respect of infrastructure projects and USD 1,000,000 per project, for other consultancy services procured from outside India.

(iv) Remittances exceeding 5% of investment brought into India or USD 100,000 whichever is higher, by an entity in India by way of reimbursement of pre-incorporation expenses.”

Operational Instructions to ADs while permitting remittances abroad:-

1. AD to be reasonably satisfied of the purpose. 
2. ADs to obtain a declaration that will reasonably satisfy that the transaction is within the provisions of FEMA.
3. Form A2 to be filled up by applicant and retained by AD for one year for verification by internal auditors.
4. For amounts not exceeding USD 25000, simple letter required.