Maximum money that can be sent abroad as per RBI
The RBI prescribes separate limits for other remittances such as travel, education or medical expenses (see table). These limits are in addition to the limits prescribed by the LRS.
Purpose
|
Limit
|
Private travel
|
$10,000 per financial year
|
Business travel
|
$ 25,000 per trip
|
Studies
|
$ 1,00,000 per academic year
|
Medical treatment
|
$ 1,00,000 per financial year
|
Liberalised Remittance Scheme
|
$ 2,00,000 per financial year
|
These limits are also gross limits. That is, you can remit up to these limits out of the country irrespective of how much you bring in.
In 2004, Reserve Bank of India (RBI) announced the Liberalised Remittance Scheme (LRS). Thanks to this scheme, foreign remittances today can be freely made by residents to the extent of $2,00,000 per financial year. Remittances made under the LRS can be used to buy property abroad or to invest in shares, mutual funds or debt instruments in any foreign country without prior approval of the RBI.
While the scheme looks attractive on paper, it is ridden with several practical roadblocks. Confusion exists on what is allowed under the scheme, what documents are needed to be submitted and so on. Let us try to throw light on these practical aspects.
What can the LRS be used for?
LRS can be used for:
- Buying property abroad
- Investing in shares, securities, bonds, mutual funds abroad
- Opening and maintaining foreign currency accounts with banks outside India for carrying out the above mentioned transactions
- Gifts and donations abroad
For instance, if a customer decides to open a broking account abroad and deposits $2,00,000 (under the Liberalised Remittance Scheme) and later that year, decides he wants to withdraw all his money and open an account at another financial institution, he will not be able to do so.