Transferring foreign currency from India to any international location is subject to the rules of the Foreign Exchange Management Act. Sending foreign currency out of India is under greater scrutiny by the government than inward remittances. The Reserve Bank of India has the authority to regulate the norms for transferring foreign currency in public interest. Till 2013, one could send not more that USD 75,000 every financial year from India to abroad. In 2014, the RBI increased the limit from USD 75,000 to USD 1, 25,000. From 2015 onwards, the limit has been further increased to USD 2, 50,000 under the Liberalised Remittance Scheme or LRS.
The Liberalised Remittance Scheme was introduced in February 2004, allowing citizens to transfer foreign currency from India to overseas accounts for a permitted set of current or capital account transactions or combination of both. The Reserve Bank of India permits to transfer foreign currency abroad for a select few purposes that include education fee, medical treatment costs, investment in shares or property, donations or gifts, for travel purpose, and for maintenance of relatives staying abroad.
Liberalised Remittance Scheme (LRS) can be availed for purchasing or remitting foreign currency up to USD 250,000 per financial year (April- March) for permissible transactions.
If you want to transfer foreign currency exceeding USD 2, 50,000 per year then you have to take special permission from the Reserve Bank of India.
One can purchase foreign exchange from an Authorized Dealer banks, money changers, entities such as Thomas Cook and Cox & Kings and select NBFCs.
LRS is applicable to all Resident Individuals including Minors (i.e., Person resident in India under FEMA 1999). In other words this facility is not available to HUF, Partnership Firm, Trust, Society, Association of Persons, Body of Individuals, LLP, Company etc.
For remittances under LRS, approval from the Reserve Bank is not required.
LRS is not available to NRI’s.
There is no restriction on frequency of transactions under LRS. However, the total amount of foreign exchange purchased or remitted should not exceed USD 250,000 or its equivalent in the financial year.
The Reserve Bank of India has tightened the rules for remitting money abroad under the Liberalised Remittance Scheme and has made PAN mandatory for anyone using this scheme. Earlier PAN was not insisted upon for transactions of up to $25,000.
Current Account Transactions permitted under LRS
Private Visits to any country (except Bhutan and Nepal)
Gifts or donation
Going abroad for employment
Maintenance of close relatives abroad. Relative as per Section 6 of the Companies Act
Medical Treatment abroad
Any other permissible current account transaction as per FEMA.
Capital Account Transactions permitted under LRS
Opening a foreign currency bank account abroad
Transferring money to own foreign currency accounts abroad
Purchasing property abroad
Making investments abroad
Purchasing object of Art subject to provisions of extant Foreign Trade Policy
Loans and gifts in Indian Rupees to NRI/PIO close relatives
Repayment of a loan abroad availed while you were a non-resident