Definition
Liberalised Remittance Scheme (LRS)
The Liberalised Remittance Scheme is an RBI facility allowing resident individuals to remit money abroad up to an annual limit for permitted current and capital account transactions.
Under the LRS, a resident individual can send up to a specified amount per financial year overseas for purposes like travel, education, medical treatment, gifts, maintenance of relatives, and investments in foreign shares or property.
Remittances above certain thresholds attract TCS (tax collected at source), which is creditable against your income tax. The scheme excludes prohibited transactions (such as remittances for certain speculative or restricted purposes).
LRS is the gateway for Indians investing in US/global stocks and other foreign assets, and such investments must be reported in the tax return. Understanding the annual cap and TCS is essential before remitting.
Related terms
- US Stocks from India (LRS)Indian residents can invest in US and other foreign stocks by remitting money abroad under the RBI's Liberalised Remittance Scheme, subject to its annual limit and tax rules.
- Direct IndexingDirect indexing means owning the individual stocks that make up an index in your own account, rather than buying an index fund or ETF, allowing customisation and tax management.
- Cross-border UPICross-border UPI refers to NPCI's linkages that let Indians use UPI for payments abroad and enable inbound remittances, by connecting UPI with other countries' payment systems.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.