Liberalised Remittance Scheme (LRS) for Overseas Investment by Residents
The Liberalised Remittance Scheme is the gateway for resident individuals in India to invest, spend, and remit money abroad. Whether you want to buy overseas shares, fund a foreign subsidiary, or support family abroad, the LRS sets the rules and the limit. This guide explains the Liberalised Remittance Scheme (LRS) for overseas investment by residents — the limit, permissible uses, restrictions, and TCS.
What Is the LRS?
The Liberalised Remittance Scheme, introduced by RBI, allows resident individuals to freely remit up to a specified limit per financial year for permitted current and capital account transactions. It is the primary route for individuals to make overseas investments and other foreign remittances.
The LRS Limit
Under the LRS, a resident individual can remit up to USD 250,000 per financial year. This single limit covers all eligible transactions combined — investment, travel, education, medical treatment, gifts, and maintenance of relatives. All family members can use their individual limits, but each must comply separately.
Permissible Capital Account Transactions
- Purchase of shares and securities of foreign companies.
- Overseas Direct Investment (ODI) in a foreign entity, subject to the ODI rules.
- Overseas Portfolio Investment (OPI) in listed foreign securities.
- Purchase of immovable property abroad.
- Opening foreign currency accounts abroad.
Permissible Current Account Transactions
- Private travel and business travel.
- Education and medical treatment abroad.
- Gifts and donations.
- Maintenance of close relatives abroad.
Restrictions Under LRS
The LRS cannot be used for:
- Remittances to countries identified as non-cooperative or to specified prohibited entities.
- Trading in foreign exchange or margin trading.
- Purchase of lottery tickets or prohibited items.
- Speculative activities.
Tax Collected at Source (TCS)
Remittances under the LRS attract Tax Collected at Source (TCS) above certain thresholds, with different rates for education, medical, and other purposes. The TCS can be adjusted against your income tax liability when you file your return, so it is a cash-flow cost rather than a final tax.
LRS for ODI by Individuals
Resident individuals making ODI in a foreign entity do so within the LRS limit and must comply with the ODI rules, including Form FC and APR reporting where applicable.
LRS Quick Facts
| Item | Detail |
|---|---|
| Eligible person | Resident individual |
| Annual limit | USD 250,000 per financial year |
| Covers | Investment, travel, education, medical, gifts |
| Tax | TCS above thresholds |
| Route | Through AD bank |
Frequently Asked Questions
What is the LRS annual limit?
USD 250,000 per financial year per resident individual, covering all eligible transactions.
Can I invest in foreign shares under LRS?
Yes — both ODI and OPI in foreign securities are permitted within the limit.
Is TCS a final tax?
No. TCS can be adjusted against your income tax liability when filing your return.
Can family members pool their limits?
Each individual has a separate limit; they can remit individually but must each comply with LRS conditions.
Use the LRS the Right Way
S. Choudhary & Co. advises residents on LRS-based overseas investment, ODI compliance, and TCS planning. Explore our Overseas Direct Investment services or call +91 90248 28295 · sushil@sushilchoudhary.com.
