Liberalised Remittance Scheme
Also called: LRS · Topic: Balance of Payments and Exchange Rates · NCERT: Beyond NCERT
Meaning
The Liberalised Remittance Scheme (LRS) is an RBI facility that lets resident individuals send money abroad. They can use it for permitted current account transactions, such as travel, study or gifts, and for permitted capital account transactions, such as buying foreign shares or property. The limit has risen from US$25,000 when it began in 2004 to US$250,000 per financial year. Tax collected at source (TCS) is charged on LRS remittances above a threshold. The scheme is a step towards partial capital account convertibility for individuals.
Example
An Indian parent can send money for a child's college fees in the UK, and also buy shares of a US company, under LRS. The total for the financial year must stay within US$250,000.
Don't confuse with
- Remittances (inward): these are money sent home by Indians working abroad and are recorded as transfers in the current account. LRS is money that residents send out of India.
Related concepts
- Currency convertibility
- Current account convertibility
- Capital account convertibility
- Capital controls