LRS is a scheme introduced for all resident individuals including minors to remit outside India for all the permissible Current / Capital account transactions up toUSD 250,000 per financial year (April-March) per person (including minor individuals) without RBI permission.
If an individual has already remitted any amount under the LRS, then the applicable limit for such an individual would be reduced from the present limit of USD 250,000 for the financial year by the amount already remitted.The permissible capital account transactions by an individual under LRS are:
i) Opening of foreign currency account abroad with a bank;
ii) Purchase of property abroad
iii) Making investments abroad
iv) Setting up Wholly owned subsidiaries and Joint Ventures abroad
v)Extending loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 2013.
Current Account Transactions:
Individuals can avail of foreign exchange facility for the following purposes within the limit of USD 250,000 only. Any additional remittance in excess of the said limit for the following purposes shall require prior approval of the Reserve Bank of India.
(i) Private visits to any country (except Nepal and Bhutan)
(ii) Gift or donation.
(iii) Going abroad for employment
(v) Maintenance of close relatives abroad
(vi) Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/ check-up.
(vii)Expenses in connection with medical treatment abroad
(viii) Studies abroad
(ix)Any other current account transaction
However, for the remittance of amount for the purpose of Emigration or in connection with the medical treatment or studies abroad, an individual may avail of exchange facility for an amount excess of the overall limit prescribed under the LRS, if it is so required by a country of immigration, medical institute offering treatment or the university respectively.
Also, gift in Indian Rupees by resident individuals to NRI relatives as defined in the Companies Act, 2013 shall also be subsumed under the LRS limit.
Persons other than individuals can make remittances for the below purposes:
i) Donations for educational institutions;
ii) Commissions to agents abroad for sale of residential flats/commercial plots in India;
iii) Remittances for consultancy services and
iv)Remittances for reimbursement of pre-incorporation expenses
within the limit and conditions laid down therein
Persons other than individuals (such as corporates, trusts; etc.) can remit upto USD 2.50,000 under LRS Facility for any current account transaction as mentioned above.
All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges / overseas counterparty are not allowed under LRS.
The resident individual investors can retain and re-invest the income earned on investments made under LRS. The residents are not required to repatriate the funds or income generated out of the investments made abroad under LRS to India.