LRS is a scheme introduced by the RBI as a step towards further simplification and liberalization of foreign exchange facilities available to RI and also for other persons resident in India (for certain transactions) subject to limits and conditions as specified in FEMA. Currently the bank allows remittance of all permissible Current/ Capital account transactions upto USD 2,50,000/- per FY (April- March) per RI without RBI permission.
Exceptions for certain individuals
*A person who is a resident but not permanently resident in India and
- Is a citizen of foreign state other than Pakistan; or
Is a citizen of India, who is on deputation to the office or branch of a foreign company or subsidiary or joint venture in India of such foreign company, may make remittance upto his net salary (after deduction of taxes, contribution to provident fund and other deductions).
*A person resident in India on account of his employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignments, the duration of which does not exceed three years, is a resident but not permanently resident.
Points to Remember:
LRS is not available to corporates, partnership firms, HUF, Trusts, etc.
The RI will have to designate a branch of an AD Bank through which all the remittances under LRS will be made.
A RI cannot gift to another RI in foreign currency, for the credit of latter’s foreign currency a/c held abroad under LRS.
RIs can also open, maintain and hold foreign currency a/c’s with a bank outside India for making remittances under LRS without prior RBI approval. The foreign currency a/c may be used for putting through all transactions connected with or arising from remittances under LRS.