The Liberalised Remittance Scheme (LRS) by the RBI allows resident individuals to remit up to USD 250,000 per financial year abroad. If you're wondering what is Liberalised Remittance Scheme, it enables overseas payments for education & medical treatment, travel & gifts, foreign investments and business & emigration needs. Budget 2025 raised the TCS-free limit from ₹7 lakh to ₹10 lakh for most transactions.
This guide explains the Liberalised Remittance Scheme meaning, latest limits, tax rules, and usage benefits.
The LRS full form is Liberalised Remittance Scheme. It is a foreign exchange policy initiative introduced by the Reserve Bank of India in 2004. It intended to simplify and streamline the process of remitting funds outside India.
This scheme helped Indians overcome international fund transfer restrictions as set by the FEMA (Foreign Exchange Management Act), 1999. Under LRS, resident individuals can freely remit funds up to a certain limit for various permissible transactions involving a current or capital account.
The LRS scheme applies to the residents of India, and thus, the remittance takes place through a savings account. Non-Residential Indians are not supposed to have any savings accounts in Indian banks. Thus, they cannot remit funds from India, but they are permitted to transfer funds from NRO, NRE, and FCNR accounts abroad as per the regulations and requisite documentation:
The Liberalised Remittance Scheme is available to the following individuals and circumstances:
Under the LRS, a resident individual can remit up to USD 250,000 per financial year for permissible transactions. The LRS limit for education, medical treatment, employment, emigration, travel, investment, etc., is the same as mentioned. However, you can not use the remittances for margin trading, buying lottery tickets, real estate, etc.
As per Budget 2025, the threshold limit for Tax Collected at Source (TCS) on foreign remittances under the Liberalised Remittance Scheme has been increased from ₹7 lakh to ₹10 lakh per financial year. This means no TCS will be levied for LRS transactions up to ₹10 lakh annually.
Additionally, no TCS will apply on remittances made for educational purposes if the funds are sourced via loans from recognised financial institutions. For remittances beyond the ₹10 lakh limit (except education loans), a 5% TCS will be applicable.
The deducted TCS under LRS can be claimed as a refund when filing the income tax return (ITR), and details can be tracked via Form 26AS.
Outward remittance indicates the transfer of funds from an Indian account to a foreign account. As per the RBI guidelines, outward remittance can be paid through a demand draft issued in the individual or the beneficiary's name. You can also open a bank account outside India to maintain foreign accounts. Here are some of the steps to do the same:
Some of the notable benefits of LRS are as follows:
Since its introduction, the Liberalised Remittance Scheme has paved the way for international trade, foreign investment, and more. However, you need what the Liberalised Remittance Scheme stipulates, especially its eligibility criteria and documentation requirements for a hassle-free transaction.