How Much Money Can You Send Abroad Under RBI’s Liberalised Remittance Scheme (LRS)

India’s economic growth and increasing global integration have prompted more individuals to look beyond borders—whether it’s for education, investing in international stocks, buying property, or supporting family. However, the ability to send money abroad is governed by the Reserve Bank of India’s Liberalised Remittance Scheme (LRS), which lays down clear rules and limits. Here’s what Indian residents need to know.

Understanding the Liberalised Remittance Scheme (LRS)

The Liberalised Remittance Scheme is a provision by the Reserve Bank of India that allows Indian residents to remit a certain amount of money abroad for permitted transactions. The annual limit under this scheme is $2,50,000 per financial year, applicable to every individual, including minors (with necessary authorisation from a guardian).

This amount can be used for various permissible transactions, such as:

• Overseas education
  
• Investment in foreign equity or debt instruments
  
• Maintenance of relatives abroad
  
• Medical treatment overseas
  
• Travel and tourism
  
• Buying immovable property outside India

Timing Matters: The Financial Year Advantage

One of the key aspects of the LRS is that it follows the Indian financial year cycle, ending on March 31 each year. This opens up a strategic opportunity for those wishing to remit larger amounts.

If an individual had remitted $2.5 lakh before March 31, 2025, and repeats the same transaction after the beginning of the next financial year (i.e., from April 1 onwards), a total of $5 lakh can be remitted within a short span of a few days.

To put this in perspective, at an exchange rate of ₹86 per US dollar, this amounts to over ₹4.3 crore remitted abroad in just a matter of days.

Purpose of Remittance: What’s Permitted?

Under LRS, remittances are allowed for:

• Current account transactions: like travel, education fees, medical expenses, gifts, and maintenance of close relatives.

• Capital account transactions: such as investment in foreign equity, debt, real estate, or opening foreign bank accounts.

Any remittance that does not fall under the permissible categories is not allowed and may be subject to regulatory scrutiny.

Investing in Global Financial Assets

A notable trend in recent years is the rise in overseas investments by Indians, particularly into equity and debt markets abroad. In fact, data from October 2024 indicated a 78% year-on-year increase in equity and debt investments made under LRS.

For Indian investors eyeing the US stock market, the process generally involves:

1. Opening an international trading account through an authorised Indian or global brokerage platform.
   
2. Completing KYC formalities and LRS-related compliance with the help of the broker.
   
3. Converting Indian rupees into US dollars through an authorised dealer.
   
4. Funding a foreign bank account linked to the trading platform.
   
5. Finally, using the funds to purchase international stocks or ETFs.

Key Considerations for Indian Remitters

While the process has become simpler over the years, here are some important things to note:

• Ensure compliance with the annual LRS limit and keep records of your remittances.
  
• Keep in mind that TCS (Tax Collected at Source) may be applicable on certain types of foreign remittances.
  
• If you’ve already made a remittance in the current year, ensure you don’t exceed the $2.5 lakh cap, as penalties may apply.

Conclusion

The Liberalised Remittance Scheme is a powerful tool for Indian residents seeking to explore global opportunities—be it in education, real estate, or equity markets. However, it is crucial to stay informed about the latest guidelines, deadlines, and documentation requirements. With the end of the financial year approaching, those looking to make the most of their remittance limits must plan their transactions wisely and ensure they are in line with RBI’s regulations.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.