Remittance facilities for Resident Individuals

Remittance facilities for Resident Individuals

Remittance facilities

Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 or its equivalent per financial year (April – March) for any permissible current or capital account transaction or a combination of both. The Scheme is not available to corporates, partnership firms, HUF, Trusts, etc.

Permissible Capital Account transactions under LRS:

  • Opening of foreign currency account abroad with a bank;
  • Purchase of property abroad;
  • Making investments abroad- acquisition and holding shares of both listed and unlisted overseas company or debt instruments; investment in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes;
  • Setting up Wholly Owned Subsidiaries and Joint Ventures outside India for bonafide business subject to the terms & conditions.
  • Extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 2013.

Permissible Current Account transactions under LRS:

  • Private visits to any country (except Nepal and Bhutan)
  • Gift or donation
  • Going abroad for employment
  • Emigration
  • Maintenance of close relatives abroad
  • Travel for business, or attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/ check-up
  • Expenses in connection with medical treatment abroad
  • Studies abroad
  • Any other current account transaction which is not covered under the definition of current account in FEMA 1999.

Prohibited remittances under the LRS Scheme:

  • Remittance for any purpose specifically prohibited under Schedule-I (like purchase of lottery tickets/sweep stakes, proscribed magazines, etc.) or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transactions) Rules, 2000.
  • Remittance from India for margins or margin calls to overseas exchanges / overseas counterparty.
  • Remittances for purchase of FCCBs issued by Indian companies in the overseas secondary market.
  • Remittance for trading in foreign exchange abroad.
  • Capital account remittances, directly or indirectly, to countries identified by the Financial Action Task Force (FATF) as “non- cooperative countries and territories”, from time to time.
  • Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks.

Documents required to process LRS transactions:

  1. Form A2
  2. PAN Card is mandatory for all LRS transactions with effect from 19.06.2018
  3. Form ODI if Resident Individual is making Capital Account transactions under Overseas Direct Investment (ODI) Route
  4. Estimation from overseas Educational Insinuation if remittance towards studies abroad
  5. Estimate from the Doctors in India and/or Abroad if remittance towards medical treatment
  6. Resident Individual should have an account with the branch for minimum period of 1 year for all capital account transactions.