The LRS full form is Liberalised Remittance Scheme. The Liberalised Remittance Scheme by the RBI allows resident Indians to remit up to USD 250,000 annually abroad for education, travel, healthcare, gifts, and investments. Budget 2025 revised the LRS scheme with a higher TCS-free threshold of Rs. 10 lakh, making global financial transactions easier.
Key Highlights:
- TCS-free threshold: Rs. 10 lakh (raised from Rs. 7 lakh in Budget 2025)
- Eligible purposes: Education, travel, gifts, medical treatment, investments, emigration, business
- Ineligible uses: Lottery, margin trading, overseas real estate
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 Liberalised Remittance Scheme, a resident individual can remit up to USD 250,000 per financial year for permissible transactions. The LRS scheme 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 Rs. 7 lakh to Rs. 10 lakh per financial year. This means no TCS will be levied for LRS transactions up to Rs. 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 Rs. 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 scheme are as follows:
The Liberalised Remittance Scheme (LRS) provides Indian residents a structured framework to send funds abroad for various needs while ensuring compliance with RBI’s guidelines. With an annual limit of USD 250,000, increased TCS-free threshold of Rs. 10 lakh, and multiple eligible categories, the LRS scheme supports global investments, education, healthcare, and lifestyle requirements.