Liberalised Remittance Scheme (LRS): Rules, Limits, Eligibility & RBI Guidelines (2026)

Many people face confusion when sending money abroad due to limited awareness of the Liberalised Remittance Scheme. Introduced by the Reserve Bank of India under the Foreign Exchange Management Act, 1999, the LRS allows resident individuals in India to remit up to $250,000 per financial year for permitted purposes. While NRIs cannot directly use the scheme, they can receive funds from resident relatives in India. If an NRI returns to India and qualifies as a resident under FEMA regulations, they can then remit funds under the LRS framework. This blog covers the Liberalised Remittance Scheme for NRIs, including benefits, eligibility, and the latest RBI guidelines.

What is the Liberalised Remittance Scheme (LRS)?

The Liberalised Remittance Scheme was launched by the Reserve Bank of India in 2004 to regulate outward money transfers from India. It permits resident Indians to remit up to $250,000 abroad annually for purposes including education, medical needs, gifts, or investment. Governed by the Foreign Exchange Management Act, 1999, LRS helps ensure that overseas transactions are conducted in accordance with RBI guidelines. [1] [2]

What Does LRS Stand For, and When Was it Introduced?

LRS stands for Liberalised Remittance Scheme and was introduced by the Reserve Bank of India in 2004 under FEMA regulations to regulate overseas remittances by resident Indians. The scheme is strictly for resident Indians. Corporations, partnership firms, HUFs, NRIs and trusts are not eligible under this scheme.

Can NRIs use LRS?

No, NRIs cannot use the Liberalised Remittance Scheme directly, as it is available only to resident Indians. However, NRIs can receive funds remitted by eligible resident relatives from India under LRS guidelines.

Prohibited Transactions Under Liberalised Remittance Scheme

• Remittances for margin trading or speculative trading abroad
• Purchase of lottery tickets, banned magazines, or sweepstakes
• Remittances for trading in foreign exchange abroad
• Investments in foreign entities engaged in real estate trading or agricultural activities
• Sending money to countries or individuals restricted by the GOI or RBI
• Remittances for purposes prohibited under FEMA, 1999
• Purchase of Foreign Currency Convertible Bonds issued by Indian companies abroad without RBI approval
• Remittances are directly or indirectly linked to gambling, betting, or other illegal activities.

Why LRS Matters in 2026?

While the Liberalised Remittance Scheme is meant for resident Indians, it remains important for NRIs who receive funds from family members in India, as it provides a regulated and secure way to transfer money abroad. Here’s why LRS matters for NRIs:

• Fund overseas education: Under the LRS, resident parents can remit funds to their NRI children living abroad for tuition fees, accommodation, and other educational expenses. 
• Support family abroad: Indian residents can remit funds to cover the maintenance and living expenses of relatives living outside India. 
• Gift funds to NRI family: LRS allows residents to legally gift money to eligible NRI relatives abroad, within the annual $250,000 limit under the Liberalised Remittance Scheme. 
• Invest in global assets: Resident individuals can use LRS to invest in foreign stocks, property, mutual funds, and other overseas assets.
• Safer than informal channels: LRS ensures that remittances are made through authorised banking channels regulated by the RBI and the FEMA, 1999 guidelines.

Liberalized Remittance Scheme Limit, TCS & Costs

The LRS limit allows an individual to remit up to $250,000 per financial year outside India for any permissible current or capital account transactions. The scheme includes specific limits, Tax Collected at Source rules, and related banking charges, as follows:

What is the Current LRS Limit?

Under the Liberalized Remittance Scheme, resident individuals can remit up to $250,000 in a single financial year for permitted purposes such as education, medical treatment, travel, gifts, maintenance of relatives, and overseas investments. This LRS limit applies collectively to all remittances made during the financial year.

What is the Applicable TCS on Remittances Made Under the LRS?

TCS or Tax Collected at Source is a tax collected on certain foreign remittances made under LRS as per the Income Tax Act, 1961. The applicable TCS rate depends on the purpose of the fund transfer. The applicable TCS rate on remittances made under the LRS, depending on the purpose of remittance, is as follows:  

Note: Always factor in the bank’s exchange rate margin when calculating the total cost of an international remittance, not just TCS and wire transfer fees.

How to Reduce TCS on an LRS Remittance in 2026? 

One can use the following strategies to reduce TCS on LRS remittances and transfers:

• Stay under the ₹10 lakh LRS limit
• Fund education through authorised loans
• Use international cards carefully
• Claim TCS credit while filing ITR.

Eligibility Criteria and Documents Required Under the Liberalised Remittance Scheme

To successfully remit money overseas, resident Indians must meet the eligibility requirements under the Liberalised Remittance Scheme and submit the required supporting documents. 

Who Can Remit Under LRS?

The Liberalised Remittance Scheme is available only to resident Indians. The following individuals are eligible to remit funds under LRS:

• Resident Indian above 18 years of age
• Minors, through their natural guardian
• Individuals with a valid PAN card
• Resident individuals maintaining a bank account with an authorised dealer bank in India
• Individuals remitting funds for permitted current or capital account transactions under FEMA guidelines.

H3: Who Is Eligible To Avail Of This Liberalised Remittance Scheme?

To avail of the Liberalised Remittance Scheme, a non-resident individual must meet the following eligibility criteria:

• Hold a valid Indian passport or a person of Indian origin (PIO) card
• Have maintained a bank account with an authorised dealer (AD) Category-I bank in India for a minimum of one year
• Not be a resident of Pakistan, Bangladesh, Nepal, Bhutan, Afghanistan, China, Iran, Iraq, the Maldives, or Sri Lanka
• Abide by the rules and regulations set forth by the RBI regarding the Liberalised Remittance Scheme

What Documents are Needed for Remittances Under LRS?

Residents are required to arrange the following documents for remittances made under the Liberalised Remittance Scheme. The exact documents required for the same vary depending on the type and purpose of the remittance:

How to Send Money Under LRS?: Step-by-Step Process

Resident Indians can send up to ₹250,000 under the RBI’s Liberalised Remittance Scheme through the following steps:

• Step 1: Verify your eligibility: Confirm that you are eligible to remit funds under the Liberalised Remittance Scheme. Under LRS rules, corporates, partnership firms, Hindu Undivided Families, and trusts are not permitted to send money under the scheme. 
• Step 2: Gather beneficiary information: Before initiating the transfer, collect the beneficiary’s details, including their full name, overseas address, bank account number, bank name, branch address, SWIFT, BIC code, and the purpose code for the remittance. 
• Step 3: Prepare your documents: Arrange the required documents for Anti-Money Laundering compliance, along with supporting documents based on the purpose of the remittance, such as education, medical treatment, maintenance, or investment. 
• Step 4: Fill Form A2 along with the declaration: Form A2 is a mandatory declaration required by authorised dealer banks for the purchase of foreign exchange. In the declaration, you will need to enter the remittance amount and specify the exact purpose of the transfer.
• Step 5: Execute the transfer: Submit the application and supporting documents to your bank. Once the transaction is verified and approved, the bank will debit the equivalent INR amount from the sender’s account and process it to the beneficiary abroad.

Region Guide: What NRIs Need to Know When Receiving Funds

While the resident Indian sending money from India must comply with the RBI regulations under the Liberalised Remittance Scheme, NRIs receiving funds abroad should also comply with the tax and reporting requirements applicable in their country of residence. These include:

Common LRS Mistakes to Avoid

Before making a remittance outside India under the Liberalised Remittance Scheme, it is important to track cumulative remittances across all banks, select the correct purpose code, and account for applicable TCS and bank charges. Ignoring these often leads to delays, non-compliance issues, or rejection of the remittance request. Common LRS mistakes to avoid include:

• NRI trying to initiate a transfer: NRIs sometimes attempt to remit under LRS despite not being eligible for the scheme. The Liberalised Remittance Scheme RBI is available only to resident Indians. NRIs can receive funds but cannot directly use LRS for outward remittances. 
• Ignoring LRS limits & not tracking cumulative remittances: Resident Indians can remit up to $250,000 per financial year under LRS. This limit applies collectively across all AD banks. One should track all foreign remittances made during the financial year so the total amount remains within the limit. 
• Selecting the wrong purpose code: Incorrect purpose codes often delay approvals, trigger compliance checks, and lead to rejection of the remittance application. Applicants should select the correct RBI purpose code based on the nature of the remittance.
• Not planning for applicable TCS deductions: Many residents do not account for the upfront TCS on foreign remittances, which affects the total money debited from their account. One should understand the applicable TCS rates, thresholds, and exemptions before starting the transfer.
• Not claiming TCS credits: Many individuals forget to claim the TCS deducted from their foreign remittances when filing their ITR, thereby increasing their total tax burden. Proper records of TCS deductions should be maintained and claimed as a tax credit while filing returns. 

Manage LRS Remittances Easily with NoBroker

Initiating overseas remittances without proper awareness of RBI regulations, TCS rules, and documentation requirements often results in delays, non-compliance and extra tax liability. Guidance from expert advisors such as NoBroker can help ease the remittance process. From documentation and compliance checks to help with TCS rules and remittance procedures, NoBroker is the one-stop solution for everything related to the Liberalised Remittance Scheme and related NRI services.