Liberalised Remittance Scheme (LRS) — Limits & TCS | Savlana Init

Cross-Border · Outward Remittance

Liberalised Remittance Scheme — Send Money Out, Correctly.

Resident individuals may remit up to the prescribed annual limit abroad for permitted current and capital account purposes. The rules on eligibility, purpose, TCS and reporting are where it goes wrong.

The Liberalised Remittance Scheme allows a resident individual to remit up to two hundred and fifty thousand United States dollars, or its equivalent, in a financial year for permitted current account and capital account transactions. The facility is available to every resident individual including minors — where the remitter is a minor, the natural guardian countersigns the declaration — but it is not available to corporates, partnership firms, limited liability partnerships, Hindu undivided families, trusts or other entities. The limit is per individual per financial year and is not carried forward if unused.

Permitted uses are broad. On the current account side they include private and business travel, education abroad, medical treatment, maintenance of close relatives, gifts and donations, and emigration. On the capital account side they include opening a foreign currency account with a bank outside India, purchase of immovable property abroad, investment in shares, debt instruments and units of overseas funds, setting up wholly owned subsidiaries and joint ventures subject to the overseas investment rules, and extending rupee loans to non-resident close relatives. Remittances by family members may be pooled for a single capital account transaction only where each member is a co-owner or co-partner in the investment.

The prohibitions are equally definite. Remittance is not permitted for margin or margin calls to overseas exchanges, purchase of foreign currency convertible bonds issued by Indian companies in the overseas secondary market, trading in foreign exchange abroad, the purchase of lottery tickets, sweepstakes and prohibited magazines, or for any purpose specifically prohibited under Schedule I or Schedule II of the current account transaction rules. Remittances are also not permitted directly or indirectly to countries identified by the Financial Action Task Force as non-cooperative, or to entities identified as posing terrorist risk. Every remittance requires a Form A2 declaration, a PAN, and tax collection at source under Section 206C(1G) at rates and thresholds that have been revised repeatedly.

Our LRS Services

LRS Eligibility and Limit Review

Confirmation that you are eligible, computation of the limit already used across banks in the financial year, and the headroom actually available.

Purpose Code Classification

Correct classification of the remittance purpose, since the code determines the documentation, the TCS rate and how the transaction is reported.

Form A2 and Declaration Preparation

Preparation of the Form A2 application and the supporting declaration confirming compliance with the scheme and the aggregate remitted in the year.

TCS Computation and Planning

Computation of tax collected at source under Section 206C(1G) at the applicable rate and threshold, and planning of remittance timing across financial years.

Overseas Education Remittance

Handling of remittances for tuition, living expenses and travel, including the concessional treatment where funding comes from an education loan.

Overseas Investment Compliance

Guidance on investment in foreign shares, funds and immovable property under the overseas investment framework, and the reporting each attracts.

TCS Credit and Refund

Claiming credit for tax collected at source in the return, and recovery by refund where the collection exceeds the actual liability for the year.

Foreign Asset Reporting

Schedule FA disclosure of the foreign accounts, securities and property created by your remittances, and the income arising from them.

Our Process

Eligibility and Headroom Check

We confirm eligibility and establish how much of the annual limit has already been used across all banks, since the limit is per person and not per bank.

Purpose and Documentation

The purpose is classified against the permitted list, and the specific documents that bank requires for that purpose are assembled.

TCS Determination

Tax collectible at source is computed on the applicable threshold and rate, and where beneficial, remittance is split across financial years.

Filing and Remittance

Form A2 and the declaration are submitted to the authorised dealer, queries are resolved, and the remittance is executed and confirmed.

Reporting and Credit

The foreign asset created is tracked for Schedule FA disclosure, and TCS credit is claimed in the return for the year.

Why It Matters

✓Annual limit tracked across all banks, not just the one you are using

✓Purpose classified correctly, so the remittance is not returned

✓TCS computed on the right threshold and rate before you remit

✓Education remittances routed to attract the concessional treatment

✓Prohibited purposes identified before an application is made

✓Family pooling structured only where the rules actually permit it

✓TCS credit claimed in the return and refunded where excess

✓Foreign assets created by remittance disclosed in Schedule FA

Frequently Asked Questions

Only resident individuals, including minors. It is not available to corporates, partnership firms, limited liability partnerships, Hindu undivided families, trusts or other entities, which must use the separate routes available to them. Where the remitter is a minor, the Form A2 declaration must be countersigned by the natural guardian. Non-residents cannot use the scheme; their remittances fall under the remittance of assets rules instead.

The limit is two hundred and fifty thousand United States dollars or its equivalent per individual per financial year, and it applies across all banks and all purposes taken together — not separately for each bank or each transaction. Unused limit is not carried forward to the next year. Banks require a declaration of the total already remitted in the year, and misdeclaration is a contravention rather than an oversight.

Margin and margin calls to overseas exchanges, purchase of foreign currency convertible bonds issued by Indian companies in the overseas secondary market, trading in foreign exchange abroad, purchase of lottery tickets, sweepstakes and banned publications, and any transaction prohibited under Schedule I or Schedule II of the current account transaction rules. Remittances to countries identified by the Financial Action Task Force as non-cooperative, and to entities posing terrorist risk, are also prohibited.

Tax is collected at source under Section 206C(1G) by the authorised dealer at the time of remittance, above a prescribed annual threshold. Rates differ by purpose — education and medical remittances attract a lower rate, remittances funded by an education loan from a notified financial institution are relieved, overseas tour packages have their own treatment, and other purposes attract the higher rate. Thresholds and rates have been revised in successive Finance Acts, so the position should be confirmed before remitting.

Yes. Tax collected at source is not a cost; it is a prepayment of your own tax. It appears in your Form 26AS and is claimed as credit in the return for the year, set off against your total tax liability, with any excess refunded. It can also be adjusted against advance tax instalments during the year, which is the more efficient route where remittances are large.

For capital account transactions, remittances by family members may be combined only where each member is a co-owner or co-partner in the overseas investment or property. Where the individual is not a co-owner, the remittance cannot count towards that acquisition. Simply gifting within the family and remitting under separate limits to fund one person’s asset does not satisfy the requirement and has been treated as a contravention.

Planning a remittance under the Liberalised Remittance Scheme?

Tell us the amount and the purpose. We will confirm your available limit, classify the purpose correctly, compute the TCS and prepare the declaration your bank needs.