With stability in the foreign exchange market, Liberalised Remittance Scheme (LRS) limit was enhanced to USD 125,000 in June 2014 without end-use restrictions, except for prohibited foreign exchange transactions such as margin trading, lotteries and the like. On a review of the external sector outlook and as a further exercise in macro prudential management, On 3rd February,RBI has decided to enhance the limit under the LRS to USD 250,000 per person per year. Furthermore, in order to ensure ease of transactions, it has also been decided in consultation with the Government that all the facilities for release of exchange/ remittances for current account transactions available to resident individuals under Schedule III to Foreign Exchange Management (Current Account Transactions) Rules 2000, as amended from time to time, shall also be subsumed under this limit.
Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 250,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.
Under the Scheme, resident individuals can acquire and hold shares or debt instruments or any other assets including property outside India, without prior approval of the Reserve Bank. Individuals can also open, maintain and hold foreign currency accounts with banks outside India for carrying out transactions permitted under the Scheme.
Once a remittance is made for an amount up to USD 250,000 during the financial year, he would not be eligible to make any further remittances under this scheme, even if the proceeds of the investments have been brought back into the country.
Remittances for gift and donation cannot be made separately and are subsumed under the limit available under this LRS. Accordingly, resident individuals can remit towards gifts and donations up to USD 250,000 per financial year under the Scheme.
Further, a resident individual can give rupee gifts to his visiting NRI/ PIO close relatives [means relative as defined in Section 6 of the Companies Act, 1956] by way of crossed cheque/ electronic transfer within the overall limit of USD 250,000 per financial year and the gifted amount should be credited to the beneficiary’s NRO account. An individual resident can lend money by way of crossed cheque/ electronic transfer to a Non-resident Indian (NRI)/ Person of Indian Origin (PIO) close relative [means relative as defined in Section 6 of the Companies Act, 1956] within the overall limit of USD 250,000 per financial year under the Liberalised Remittance Scheme, to meet the borrower’s personal or business requirements in India, subject to conditions. The loan should be interest free and have a maturity of minimum one year and cannot be remitted outside India.
Schedule III to Foreign Exchange Management (Current Account Transactions) Rules 2000
1. Release of exchange exceeding US$ 10,000 or its equivalent in one financial year, for one or more private visits to any country (except Nepal and Bhutan).
2. Gift remittance exceeding US$ 5,000 per financial year per remitter or donor other than resident individual
3. (i) Donation exceeding US$ 5000 per financial year per remitter or donor other than resident individual
(ii) Donations by Corporate, exceeding one per cent of their foreign exchange earnings during the previous three financial years or US$ 5,000,000, whichever is less, for:-
(a) Creation of Chairs in reputed educational institutes,
(b) to funds (not being an investment fund) promoted by educational institutes; and
(c) to a technical institution or body or association in the field of activity of the donor Company.
Explanation: For the purpose of the item numbers 2 and 3, remittance of gift and donation by
resident individuals are subsumed under the Liberalised Remittance Scheme.
4. Exchange facilities exceeding USD 100,000 for persons going abroad for employment.
5. Exchange facilities for emigration exceeding USD 100,000 or amount prescribed by
country of emigration.
6. Remittance for maintenance of close relatives abroad,
i. exceeding net salary (after deduction of taxes, contribution to provident fund and other deductions) of a person who is resident but not permanently resident in India and –
(a) is a citizen of a foreign State other than Pakistan; or
(b) is a citizen of India, who is on deputation to the office or branch or subsidiary or joint venture in India of such foreign company.
ii. Exceeding USD 100,000 per year, per recipient, in all other cases.
Explanation: For the purpose of this item, a person resident in India on account of his employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignments, the duration of which does not exceed three years, is a resident but not permanently resident.
7. Release of foreign exchange, exceeding USD 25,000 to a person, irrespective of period of stay, for business travel, or attending a conference or specialised training or for maintenance expenses of a patient going abroad for medical treatment or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/check-up.
8. Release of exchange for meeting expenses for medical treatment abroad exceeding the estimate from the doctor in India or hospital/doctor abroad.
9. Release of exchange for studies abroad exceeding the estimate from the institution abroad or USD 100,000, per academic year, whichever is higher.
10. Commission, per transaction, to agents abroad for sale of residential flats or commercial plots in India exceeding USD 25,000 or 5% of the inward remittance whichever more is.
11. Remittances exceeding US$ 10,000,000 per project for any consultancy services in respect of infrastructure projects and US$ 1,000,000 per project, for other consultancy services procured from outside India.
Explanation:- For the purposes of this item number ‘infrastructure project’
is those related to –
(iv) Roads including bridges,
(v) Sea port and airport,
(vi) Industrial parks, and
(vii) Urban Infrastructure (water supply, sanitation and sewage)
12. Remittances exceeding five per cent of investment brought into India or US$ 1,00,000 whichever is higher, by an entity in India by way of reimbursement of pre-incorporation expenses.