Liberalised Remittance Scheme (LRS)

Liberalised Remittance Scheme (LRS)

Subject – Economy

Context – The outflow of foreign exchange under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI) has bounced back in the first quarter ended June 30, 2021 after a steep fall during the year-ago period when the Covid pandemic hit countries across the world and travel was banned.

Concept –

• This is the scheme of the Reserve Bank of India, introduced in the year 2004.
• All resident individuals, including minors, are allowed to freely remit up to $250,000 per financial year (April–March) for any permissible current or capital account transaction or a combination of both.
• Not Eligible: The Scheme is not available to corporations, partnership firms, Hindu Undivided Family (HUF), Trusts etc.
• Though there are no restrictions on the frequency of remittances under LRS, once a remittance is made for an amount up to USD 2,50,000 during the financial year, a resident individual would not be eligible to make any further remittances under this scheme.
• Remitted Money can be used for:
  • Expenses related to travelling (private or for business), medical treatment, study, gifts and donations, maintenance of close relatives and so on.
  • Investment in shares, debt instruments, and buy immovable properties in the overseas market.
  • Individuals can also open, maintain and hold foreign currency accounts with banks outside India for carrying out transactions permitted under the scheme.
• Requirements: It is mandatory for the resident individual to provide his/her Permanent Account Number (PAN) for all transactions under LRS made through Authorized Persons.