I keep getting questions on RBI’s LRS Scheme & is Liberalised Remittance Scheme is available for NRI.
So in this post, I have touched What is LRS Scheme? is its purpose, how much money can be remitted, requirements & a few other important questions.
What is LRS Scheme?
The Liberalised Remittance Scheme (LRS) is a facility provided by the RBI that allows resident Indians to remit a certain amount of money during a financial year to another country. The amount can be used for investment and expenditure.
Read About – How can NRIs transfer Funds to India from Overseas.
5 Facts about LRS Scheme for Indian investors Should Know
1. Liberalised Remittance Scheme is available for NRI
2. Limits
3. Current account transactions
4. Capital account transactions
5. Are there any restrictions on the usage of the money remitted
1. Liberalised remittance scheme for NRI?
Can NRIs use this scheme via their bank accounts in India?
The LRS scheme strictly applies to Indian residents only. NRIs will not have any resident savings accounts. They will have NRE, NRO or FCNR accounts only. They can remit amounts abroad from NRO, NRE and FCNR accounts subject to rules and requisite documentation –
- They can remit up to US$ 10,00,000 from an NRO account
- There are no restrictions on remittance from an NRE or FCNR account
The Liberalised Remittance Scheme has helped Indian residents manage monetary transactions abroad that have made their lives easier. The money can be used for medical expenses, education, and other purposes. It is also a great way to diversify your investment portfolio as you can invest outside India as well.
When was liberalised remittance scheme for NRIs introduced?
LRS India was introduced in 2004 & at that time limit was just $25000. The limit is substantially increased over a period of time.
Read – NRI Checklist
2. How much money can be remitted and what is the allowed frequency of transactions?
Resident individuals can remit up to $250,000 per financial year. This can be done in any number of transactions as long as the total amount does not exceed the limit. They can use the amount for both current account and capital account transactions.
What currency can I use?
Any freely convertible foreign currency can be used in this scheme.
Read – Best time to send money to India
3. Current account transactions
- Private visits to any country (excluding Nepal and Bhutan)
- Gift/Donation Include rupee gift to (NRI)/ (PIO), who is a close relative
- Emigration
- Overseas Business trip
- Medical treatment outside India
- Purchasing of objects of art
- Maintenance of close relatives outside India
- Going outside India for employment
-
Pursuing studies outside India
- Any other current account transaction which is not prohibited
4. Capital account transactions
- Purchase of property outside India
- Investment in shares, securities, mutual funds, etc. outside India
- Open account, maintain and hold foreign currency accounts with a bank outside India
- Extending loans including loans in Indian Rupees to Non-resident Indian /PIO who are close relatives, subject to stipulated terms and conditions.
5. Are there any restrictions on the usage of the money remitted?
Some transactions are not allowed under the Liberalised Remittance Scheme For NRIÂ –
- Buying and selling of foreign exchange abroad
- Purchase of lottery tickets or sweepstakes
- A gift from one Indian resident to another Indian resident, in foreign currency to be credited in the account held abroad under LRS
- Some types of income are not allowed to be transferred abroad, and there are restrictions on remitting money to certain countries.
- The LRS scheme is not available to the Association of Persons, Body of Individuals, Company, HUF, LLP, Partnership Firm, Society, and Trust.
Must check- How to Apply For NRI Credit Cards in India
What purposes can the money remitted be used for?
The money can be used for different purposes such as –
- Education abroad
- Gifts
- Donations
- Maintenance expenses of close relatives abroad
- Investment in equity, debt, or property abroad that follows prescribed regulations.
- Travel for business, conference or training
- Travel and expenditure for medical reasons for self
- Travel as a companion for a person who is going abroad for medical treatment
- Emigration purposes
- Provide a loan to a close relative who is an NRI as long as no interest is charged, and the loan is at least for a year.
“Under LRS Indian Resident Parents can gift money to their kids who are NRI/OCI/PIO.” wiseNRI
Should the resident individuals repatriate the accrued interest/dividend on deposits/investments abroad, over and above the principal amount?
The investor can retain and reinvest the income earned from portfolio investments made under the LRS scheme.
What are the requirements to make a remittance under the LRS?
The individual will require PAN and KYC completed. The individual should have maintained an account with the bank through which the remittances will take place for at least a year. The bank should conduct the necessary due diligence for the opening, maintenance, and operation of the account.
Hope this article cleared your doubts regarding liberalised remittance scheme for NRI. If you still have any questions – add them to the comment section.
Hi, my name is Uma and I am in India and have a question regarding sending money to my daughter in the US for buying property. Would LRS be applicable or any other tax?
Hi Uma,
LRS in India allows residents to remit a certain amount of money abroad each financial year for various purposes, including investments, education, travel, and purchase of property. The LRS limit was set at $250,000 per financial year per individual. The funds you’re sending to your daughter are considered a gift, generally not subject to tax in India.
Hi I am a NRI and have a NRO account in India so Ho much money i can remit from my NRO account without and taxes or TDS etc?
Hi Amity,
As per the Reserve Bank of India (RBI) regulations, the repatriation limit from an NRO account is up to USD 1 million per financial year. This limit covers all your eligible outward remittances combined for the financial year.
Hi Amit,
Remittances from NRO accounts are subject to certain rules and tax implications. Generally, any income earned in India, including interest income on NRO accounts, is subject to TDS.
My son is NRI and I am NRI too, so can I tranfer funds from my NRE account to my son’s account out side of india?
Hi Yash,
As an NRI, you can transfer funds from your NRE account to your son’s account outside of India as a gift or for any other permissible purpose. If you are transferring funds as a gift to your son, it’s essential to be aware of any gift tax implications in India or the country where your son resides.
Under the LRS schemes, if a RI is transferring money to their close relative (NRI) as a loan to their NRO account in India, can the NRI Close relative transfer that money abroad after receiving the loan amount in their NRO account?
Hi Sid,
As a NRI, your close relative can transfer up to USD 1 million per financial year from their NRO account after fulfilling certain conditions and obtaining necessary approvals from authorized banks in India. This repatriation limit is a part of the overall LRS limit that applies to NRIs as well.
I have been working in Zambia for 4 years now. I want to sell a property in india and bring the funds here for an investment. Do i need to pay a certain tax on the money i bring feom india?
Hi Badi Yaga
Kindly consult your CA for the same.
What scheme are there for NRI just like Indian resident have LRS
Hi Shrej
NRIs habe the facility of NRE, NRO or FCNR A/C for such financial remittances.
Qn1. If a resident indian parent gifts money to an NRI child by depositing the money in the child’s NRO account, is LRS applicable on that deposit? Qn2. Further, when the NRI child repatriates any money from NRO account (upto 250k in a given year) after furnishing Forms 15CA and 15CB, is LRS applicable on the repatriable amount?
Ans1. Yes, the Liberalised Remittance Scheme (LRS) is applicable when resident Indian parents give money to their Non-Resident Indian (NRI) child by depositing it in the child’s Non-Resident Ordinary (NRO) account.
Ans2. Under the LRS, an NRI individual is allowed to remit a certain amount of money outside India each financial year. As of my knowledge cutoff in September 2021, the LRS limit for individuals was set at USD 250,000 per financial year.
When an NRI child repatriates money from their NRO account, they are required to furnish Forms 15CA and 15CB. Form 15CA is an online declaration of remittance where the individual provides details of the remittance, while Form 15CB is a certificate issued by a Chartered Accountant certifying the relevant details of the remittance.
The repatriable amount, up to the permissible limit under the LRS (USD 250,000), can be transferred abroad after complying with the necessary documentation and regulatory requirements, including Forms 15CA and 15CB.
Does the new TCS of 20% apply to funds transferred out of India from Non resident account (NRI Account) in India
Hi Jycdias,
The TCS rate of 20% applies to certain specified remittances made by an Indian resident under Section 206C (1G) of the Income Tax Act, 1961. This section requires the seller or service provider to collect TCS at a rate of 0.1% of the sale consideration or the service amount exceeding Rs. 50 lakhs in a financial year.
However, this provision does not apply to funds transferred out of India from NRI account in India.
If an NRI remits funds out of their NRI account in India, they may be subject to tax in their country of residence depending on the tax laws of that country. However, TCS is not applicable on such remittances under Indian tax laws.
If I want to send INR 800000 from India to my sister living in UK as a gift, what is TDS should I pay?
Hi Jolly,
Under the Liberalised Remittance Scheme (LRS) of the RBI, Indian residents are allowed to remit up to USD 250,000 per financial year for permitted transactions, including gifts to a person residing outside India.
In your case, if you are remitting INR 800,000 (which is approximately USD 10,800 at the current exchange rate) to your sister as a gift, you are within the LRS limit and not required to pay TDS. However, it is important to keep in mind that your sister may need to report the gift received in the UK and comply with any applicable tax regulations in that country.
Does transfer from FCNR account in India to US comes under LRS? Will the tax implication of 5% apply to transfer from FCNR as well?
Hello Sarath
Yes, transferring funds from an FCNR (Foreign Currency Non-Resident) account in India to the US is considered a remittance under the Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI). Therefore, it will be subject to the same tax implication of 5% that applies to all LRS remittances exceeding the annual limit of USD 250,000 per financial year.
Hello Sarath
Yes, a transfer from an FCNR (Foreign Currency Non-Resident) account in India to the US will come under the Liberalized Remittance Scheme (LRS) if it is initiated by a resident individual. If the amount transferred from your FCNR account is less than INR 7 lakhs in a financial year, no TCS would be applicable.
We are OCIs (American Citizen) staying in India for 10 years .. Can we use LRS to transfer money to US .. we do not have NRO account as we are residing in India
Hi Kay,
As per my knowledge, you need to first change your status and then can do the same.
What is LRS limit for NRIs
The amount would be within the overall limit of USD 1million per financial year
Can I as a resident Indian gift my NRi children , please let me know the amount
Hi Teena,
There is no limit to sending money to relatives in india.
Does remittance through NRO account come under LRS?
Hi, Vishnu
Yes, It comes under LRS.
Hi , I am a NRI residing in USA and wanted to know if I can accept 100000 USD as gift money to my USA bank account from outside of USA. What are the tax implications on this exchange ?
Hi,
Kindly consult your CA.
Does NRI is eligible for LRS scheme?
Hi Peer Mohamed,
yes NRIs are also eligible for LRS scheme.
Can loan against property taken by NRI be remitted outside India ?
Hi Sanjeev,
No. The loan against property taken by NRI cannot be remitted outside India.
Hi, I am living in UAE. Currently I have personal loan in UAE. I have to settle this loan here. Therefore I am planning to take Loan against my Indian property in India. Once I get the loan deposited in NRO account I will trasfer the amount to my mother account and then my mother will transfer this amount through bank in my UAE bank. The loan amount is INR 32,00,000. Is the possible. Do I need to do any IT formalities. Is this trasfer required 15CA and 15CB form.
Hi Mr.Beniwal,
Thanks for the above article.Just a Question .Still RBI regulations I come across does mention LRS for Resident Indians only not mentioning about NRIs.(May be am I missing something?)
Is there any recent RBO notification permitting NRIs/OCIs for self outward remittance to a foreign bank acct. or a gift to another NRI/OCI,in addition to residents?(of course in this case from NRO acct for NRI)
.Thanks in advance for any inputs on that.
Hi ,
Presently I am an Indian Citizen/resident. I am expecting my US immigrant visa hopefully in a few months in 2021 . I am planning to sell my house in India and want to transfer my assets to USA , preferably before I reach USA .
I talked to some banks in India , who say that for transferring funds to USA , I need a bank account in USA , before I reach there. Without a bank account in USA , bank can not transfer funds from India on my immigration to USA .
Therefore, I want to open a bank account in USA , before I leave India for USA .
Please advise as to how I can open an account in a US bank from India for transferring funds before I leave for USA on immigration.
I am looking for some practical advice . Thanks in advance .
We are British citizens now with OCI status. We would like to transfer our savings from home rental to our foreign account in USD or GBP. Is this possible? Who can help?
Hi Kiriti,
I think, You can Consult with a Tax Consultant.
Is there an advance tax deduction in LRS amount?
Hi,
Can you clarify your question?
TCS rate is 5%