Glossary · FEMA & International Tax
LRS
Liberalised Remittance Scheme — a RBI scheme allowing resident individuals to remit up to USD 2,50,000 per financial year for permitted current and capital account transactions.
Under the LRS introduced in 2004, resident individuals (including minors) can freely remit up to $250,000 (raised from $125,000 in May 2015) per financial year for any permissible current or capital account transaction. Permitted uses include: private visits, gift or donation, education abroad, medical treatment abroad, maintenance of close relatives, business travel, employment abroad, emigration, and investment in foreign securities. Remittances exceeding the limit require RBI approval. Tax Collected at Source (TCS) at 20% applies on remittances for foreign tours, education, and medical treatment above specified thresholds (effective 1 October 2023).
Examples
A parent remits $50,000 to their child studying in the US for tuition fees under the LRS, paying 20% TCS on the amount above ₹7 lakh per financial year.