How Much Money Can I Remit Abroad Under LRS? RBI Circular Explained

Planning to fund your child’s education in another country, invest in international stocks, or simply send money to support your family overseas? These are exciting milestones, but they come with a crucial question: how much money can you legally send abroad from India? Understanding the money remittance limits under LRS is the first step to ensuring your transactions are smooth and compliant. The Reserve Bank of India (RBI) governs these transfers through its Liberalised Remittance Scheme (LRS), a framework that sets the rules for resident Indians. This comprehensive guide will demystify the LRS, explain the latest RBI guidelines, break down the tax implications like Tax Collected at Source (TCS), and definitively answer the question, “How much money can I remit abroad?”

What is the Liberalised Remittance Scheme (LRS)?

A Simple Guide to Understanding LRS for Remittance

The Liberalised Remittance Scheme, or LRS, is a provision by the Reserve Bank of India that allows resident individuals in India to freely send money abroad up to a specified limit each year. Think of it as a financial passport that lets you transfer funds for a wide range of approved purposes without needing special permission from the RBI for each transaction. For a detailed overview, you can read our guide on the Liberalised Remittance Scheme (LRS): Sending Money Abroad Legally. This framework simplifies international financial dealings for Indians, making it easier to manage overseas expenses, investments, and family needs. This LRS remittance explained for Indians guide is designed to clarify who can use this facility and for what purposes, ensuring you remain compliant with Indian regulations.

The LRS facility is available to all resident individuals, including minors. However, it’s important to note that the scheme is not applicable to corporations, partnership firms, Hindu Undivided Families (HUF), or trusts. These entities have separate rules and regulations under the Foreign Exchange Management Act (FEMA) that govern their international transactions. You can learn more about this in our FEMA Act 1999 Explained: A Complete Guide for Beginners. For individuals, the LRS provides a straightforward channel for moving funds across borders, covering both personal expenses and investment opportunities.

The Core Question: The Official Money Remittance Limits Under LRS

The Current LRS Limit: USD 250,000

The most critical aspect of the LRS is its financial ceiling. The RBI has set the current limit at USD 250,000 per resident individual for each financial year, which runs from April 1st to March 31st. This is a consolidated limit, meaning it covers the total value of all permissible current and capital account transactions you make within that year. Whether you are paying for education, making an investment, or sending a gift, all these remittances add up and count towards this single, unified limit. Understanding these remittance limits for individuals in India is essential for effective financial planning.

One of the powerful features of the LRS is that the limit is applied on an individual basis. This means each member of a family can utilize their own separate limit. For instance, a family of four (husband, wife, and two children) can collectively remit up to USD 1 million in a financial year (4 individuals x USD 250,000 each). This provides significant flexibility for families planning large overseas expenditures, such as purchasing property or funding higher education for multiple children. It is crucial to remember that this limit is not cumulative; any unused portion of your USD 250,000 allowance expires at the end of the financial year and cannot be carried forward.

Where Can You Send Your Money? Permissible vs. Prohibited Transactions

Approved Remittances Under LRS

The LRS is designed to be comprehensive, covering a broad spectrum of transactions that fall under two main categories: current account (day-to-day expenses) and capital account (investments and assets). The guidelines for money remittance LRS India are clear about what is allowed, giving individuals significant freedom in managing their global finances. Adhering to these international remittance rules India ensures your transactions are processed without any hitches.

Here are some of the most common permissible transactions under the LRS:

Private Visits: Expenses related to travel to any country, excluding Nepal and Bhutan, for tourism, business, or personal reasons.
Gift or Donation: Sending money as a gift to a non-resident Indian (NRI) or a Person of Indian Origin (PIO), or donating to a foreign charity or organization.
Overseas Education: Paying for tuition fees, accommodation, and other living expenses for a student studying abroad.
Medical Treatment Abroad: Covering the costs for medical procedures, consultations, and related expenses for a patient seeking treatment overseas.
Investing Overseas: Purchasing shares, debentures, mutual funds, or immovable property in another country.
Extending Loans: Providing rupee-denominated loans to NRI/PIO relatives.
Business Travel: Covering expenses for employees on business trips or attending international conferences.
Maintenance for Close Relatives: Sending funds to support close family members living abroad.

Prohibited Transactions Under LRS

While the LRS is liberal, it is not without its restrictions. The RBI strictly prohibits certain transactions to safeguard the country’s financial interests and prevent illegal activities. It is vital to be aware of these limitations to avoid legal complications.

The following remittances are explicitly forbidden under the LRS:

Any remittance for a purpose that is specifically prohibited under Schedule-I of the Foreign Exchange Management (Current Account Transactions) Rules, 2000. This includes activities like purchasing lottery tickets, sweepstakes, or banned magazines.
Remittances made to pay for margins or margin calls to overseas exchanges or counterparties.
Any remittance for the purpose of speculative trading in foreign exchange.
Sending funds to countries identified by the Financial Action Task Force (FATF) as “non-co-operative countries and territories.”
Remittances to individuals and entities identified as posing a significant risk of committing acts of terrorism.

For a complete and detailed list of restrictions, you can refer to the official RBI FAQs on LRS.

Decoding the Latest Rules: TCS on LRS Remittances Explained

What is Tax Collected at Source (TCS)?

One of the most significant recent developments related to the LRS is the application of Tax Collected at Source (TCS). In simple terms, TCS is a tax that your authorized dealer (like your bank) is required to collect from you when you send money abroad. It is crucial to understand that TCS is not an additional tax burden. Instead, it functions as an advance tax payment that is credited to your PAN. You can easily claim this amount back either as a credit against your total income tax liability or as a refund when you file your annual Income Tax Return (ITR). If you need help with the process, refer to our guide on how do I file my income tax return online in India?. The latest RBI circular on money remittance, along with updates from the Finance Ministry, has clarified these tax rules.

Current TCS Rates on Foreign Remittances (As per Budget 2023)

The government updated the TCS rates effective from October 1, 2023, to better track high-value international transactions. The rates vary based on the purpose of the remittance and the amount being sent. It is essential to know these slabs to plan your finances accurately.

Here is a breakdown of the current TCS rates:

Purpose of Remittance	Remittance Amount	Applicable TCS Rate
Any purpose (except Education/Medical)	Up to ₹7 Lakh	0% (No TCS)
Any purpose (Tour packages, investments, gifts etc.)	Above ₹7 Lakh	20% on the amount exceeding ₹7 Lakh
Education (financed by loan)	Above ₹7 Lakh	0.5% on the amount exceeding ₹7 Lakh
Education/Medical Treatment (self-funded)	Above ₹7 Lakh	5% on the amount exceeding ₹7 Lakh

Actionable Tip: Always keep a record of the TCS certificate (Form 27D) provided by your bank. This document is proof of the tax paid and is essential when filing your ITR. Your TCS payments will also be reflected in your Form 26AS, making it straightforward to claim credit. For more details, you can refer to official releases on the Press Information Bureau (PIB) website.

How to Remit Money Abroad: The Process and Documentation

Step-by-Step Guide for Remittance

While the rules may seem complex, the actual process of sending money abroad under LRS is quite streamlined. Authorized Dealers (ADs) have well-defined procedures to facilitate these transactions while ensuring compliance.

Here’s a simple step-by-step guide to follow:

Approach an Authorized Dealer (AD): Your first step is to contact an AD bank (most major public and private sector banks are AD Category-I) or an authorized dealer under Category-II.
Submit Form A2: You will need to fill out and sign Form A2. This is a standard declaration form where you state the purpose of the remittance and confirm that the transaction complies with LRS regulations.
Provide PAN Card: A Permanent Account Number (PAN) card is mandatory for every single transaction under the LRS. The AD will not be able to process your remittance without a valid PAN.
Submit Supporting Documents: Depending on the reason for your remittance, you may need to provide additional documents. For example:
- Overseas Education: University admission letter, fee schedule.
- Medical Treatment: Estimate from the overseas hospital or doctor.
- Overseas Investment: A declaration of the investment details.
- Gifting: A simple declaration of the relationship with the recipient.
Transaction Processing: Once you have submitted the required forms and documents, the AD bank will verify the details, check your available LRS limit for the financial year, collect the applicable TCS, and process the international transfer.

Conclusion: Navigating Your International Remittances with Confidence

Sending money abroad doesn’t have to be a daunting task. By understanding the core principles of the Liberalised Remittance Scheme, you can manage your international finances with clarity and confidence. The key takeaways are the steadfast USD 250,000 annual limit per individual, the clear distinction between permissible and prohibited transactions, and the significant impact of the 20% TCS rule on most remittances above ₹7 lakh. Understanding the money remittance limits under LRS and its associated tax implications is the first step towards seamless international transactions.

Feeling overwhelmed by FEMA compliance or tax planning for your remittances? The rules can be intricate, and expert guidance can save you time and prevent costly mistakes. The experts at TaxRobo are here to help. Contact us today for personalized guidance on managing your international finances.

Frequently Asked Questions (FAQs)

Q1: Is the USD 250,000 limit applicable to international credit card spending?
A: Yes, technically, expenses incurred using an international credit card while overseas are covered under the LRS limit of USD 250,000. However, the government has currently kept these transactions outside the purview of TCS, meaning the 20% tax is not applied to typical credit card spending for overseas goods and services.
Q2: Can I invest more than USD 250,000 in foreign stocks in a year?
A: No, the USD 250,000 limit is the absolute maximum a resident individual can remit for all purposes combined, including investments, in a single financial year. You cannot exceed this consolidated limit.
Q3: Is a PAN card mandatory for remitting money under LRS?
A: Yes, providing your PAN is absolutely mandatory for all transactions under the LRS. The authorized dealer is legally required to verify your PAN and will not process your remittance request without it.
Q4: How can I claim the TCS deducted on my LRS transaction?
A: The TCS amount deducted by your bank will be reflected in your Form 26AS against your PAN. When you file your annual Income Tax Return (ITR), you can claim this amount as a credit against your final tax liability. If the TCS paid is more than your total tax liability, you will receive a refund from the Income Tax Department.

Money Remittance Limits Under LRS: How Much Can I Send?