Liberalised Remittance Scheme (LRS)
Context
The Liberalised Remittance Scheme (LRS) streamlines the process for Indians to send money abroad for purposes like education, medical treatment, or investment
The recent surge in Indian spending on education in Georgia rose from $10.33 million in 2018-19 to $50.25 million in 2024-25.
Key Features:
It is introduced by the RBI in 2004
It allows resident individuals to remit up to USD 250,000 per financial year
The scheme is regulated by the Foreign Exchange Management Act (FEMA), 1999
Funds can be sent for a wide range of uses, including education, travel, medical treatment, investments, gifts, and donations
It is a streamlined process, and no RBI approval is required for remittances within the specified limit
Transactions are tracked by the individual's PAN card to ensure the total amount does not exceed the annual cap
Eligibility Criteria
The individual must be an Indian citizen
Resident minors are also eligible for the LRS scheme.
The minor's guardian must sign the LRS declaration form
Not Eligible:
Corporate firms
Partnership firms
HUF firms.
NRIs also cannot avail this scheme
Prohibited Transactions
Sending money to buy lottery tickets, enter sweepstakes, or purchase items banned in India
Remittances for margin trading, margin calls, or foreign exchange (forex) trading
Transferring funds to countries blocked by the RBI under the Financial Action Task Force (FATF)
Acquiring Foreign Currency Convertible Bonds (FCCBs) issued in overseas secondary markets.