What is LRS and what is the limit?

The Liberalised Remittance Scheme is the RBI facility that lets a resident individual send money out of India without seeking permission. Every route to a US share, a foreign bank account or an overseas property runs through it, and the two numbers that govern it are widely confused with each other.

The limit

A resident individual may remit up to USD 250,000 per financial year, April to March. The allowance is per individual, so a family of four has four allowances. Minors are eligible, with the form signed by a guardian.

The limit covers current account transactions and capital account transactions together, or any combination. Travel, education, medical treatment, gifts, maintenance of relatives, investment in shares and property all draw on the same pool.

It does not carry forward. An unused allowance at the end of March is gone.

The other number, which is not a limit

Tax collected at source begins above ten lakh rupees of remittance in a financial year. People routinely mistake this for a cap. It is not. You may remit the full USD 250,000, and above ten lakh rupees the bank collects tax at the time of payment.

Two things about the threshold catch people out. It is cumulative across every purpose, so education and investment and travel all count towards the same ten lakh. And it is cumulative across every bank, tracked against your PAN, so using three banks does not give you three thresholds.

The rates, for FY 2026-27

The rates for education, medical and tour packages were reduced with effect from 1 April 2026. The rate for investment and other purposes was left unchanged at twenty per cent.

Tax collected at source is not a tax

This is the single most useful thing to understand about it. TCS is an advance collection, not a cost. It appears in your Form 26AS and your Annual Information Statement, and you set it off against your total tax liability for the year. If your liability is lower, you get it back as a refund.

So the real effect is on cash flow rather than on wealth. Remit twenty lakh rupees for investment and two lakh is collected up front, money you get credit for months later when you file. For a large remittance that timing gap is worth planning around.

What LRS does not permit

• Lottery, gambling and betting of any kind
• Purchase of foreign currency convertible bonds issued by Indian companies overseas
• Margin or margin call payments to overseas exchanges and counterparties
• Trading in foreign exchange abroad
• Remittance to jurisdictions identified by the Financial Action Task Force as non-cooperative
• Investment by an individual in a foreign entity engaged in financial services
• Purchase of foreign real estate for trading, as distinct from a home or a rental property

Cards, and a distinction that matters

Spending on an international credit card while travelling abroad currently sits outside LRS, under a deferral the CBDT put in place, and attracts no TCS. Debit card and forex card spending abroad does count towards your LRS limit.

Separately, capital account transactions cannot be done on a card at all. Buying shares, opening an overseas bank account or purchasing property must go through an authorised dealer with the proper documentation. Using a card for these is not a shortcut, it is non-compliance.

The mechanics

• Remit through a bank that is an authorised dealer
• Complete Form A2 with a declaration of purpose and of your remittances so far in the year
• PAN is mandatory
• Keep your own running total across all banks, because no single bank sees your full position
• Retain the documentation, since a remittance for investment creates a foreign asset you must disclose in your return for years afterwards

That final point is the one most often missed. LRS gets the money out. The disclosure obligation that follows lasts as long as you hold the asset, and failing it carries a penalty measured in lakhs per year.