The LRS scheme enables  individuals for outbound remittance of up to US$ 250,000 per financial year (April to March) for any permissible current or capital account transaction or a combination of both. This amount can be used for business, personal, educational, and other purposes like purchase of shares, assets etc.

Remittances under the scheme are not permitted for certain activities such as real estate, the purchase of lottery tickets, margin trading, and speculation in foreign exchange markets.

There is no limit on the number of transactions that can be made within a fiscal year under the LRS scheme. However, the total amount of foreign exchange remitted through all sources in India should not exceed the LRS limit for the current fiscal year.

Aim : The primary objective of the liberalized remittance scheme is to liberalize the existing foreign exchange regulations and facilitate the smooth transfer of funds abroad by Indian residents. The scheme also aims to promote and encourage non-residents to invest in India and promote outward remittances from India.

Eligibility: In order to avail the benefit of the LRS, the individual must be an Indian resident as defined under the Foreign Exchange Management Act (FEMA). He/she must also have a valid PAN card, a bank account in India, and a valid passport.

Advantages: It enables individuals to make investments in international financial markets without having to go through the cumbersome process of obtaining permission from the RBI. This helps them to diversify their investment portfolios and get access to a wider range of financial instruments.

The scheme also provides an avenue for Indians to transfer funds to their family members or friends who are residing abroad. This is especially useful when there is an emergency where funds are needed urgently.

The scheme also opens an opportunity for non-resident Indians (NRIs) to transfer funds to their relatives in India. This can be done without any restrictions, making it easier for NRIs to maintain contact with their family members back home.

Taxes on LRS: Read here about TCS on LRS

Profits gained from overseas investments made through LRS are taxable in India depending on the investment's holding period. Investments over two years are considered long-term capital gains and impose a tax of 20% on the total profit earned. Profits earned from investments below two years are taxed at normal income tax slab rates.

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