The Liberalized Remittance Scheme (LRS) allows individuals to take foreign currencies including the US Dollar to foreign countries to undertake certain types of transactions. The transactions for which we can remit foreign currencies to overseas include overseas education, tourism, making certain types of investments in foreign countries etc. Asset purchase in the form of shares and physical assets also comes under the LRS.
The Liberalized Remittance Scheme is provided by the RBI for all resident individuals including minors to freely remit upto a certain amount in terms of US Dollar for current and capital account purposes or a combination of both. The remittance limit is set for a financial year. Regulations for the scheme are provided under the FEMA Act 1999.
Under LRS, remittances can be made for overseas education, travel, medical treatment, apart from maintenance of relatives living abroad, gifting and donations. The money can be remitted for the purchase of shares and property as well. These share and property purchases are the main capital account purposes allowable under the LRS. Individuals can also open, maintain and hold foreign currency accounts with overseas banks for carrying out transactions.
The LRS was launched in 2004 and is updated with either increasing or decreasing the limit for remittances. Similarly, the RBI is often slightly changing the purposes for which remittances are to be made.
In February 2015, the Reserve Bank of India has doubled the eligibility limit for foreign exchange remittances under the LRS to $ 250,000 per person per year.