LRS was introduced in 2004 and has been the primary legal framework for Indians sending money overseas ever since. It applies to all Indian residents (not NRIs, who have separate rules).
What is the Liberalised Remittance Scheme (LRS)?
The Liberalised Remittance Scheme (LRS) is an RBI (Reserve Bank of India) policy that allows Indian resident individuals to send money abroad freely — up to a specified annual limit — without needing prior RBI approval for permitted current and capital account transactions.
LRS was introduced in 2004 and has been the primary legal framework for Indians sending money overseas ever since. It applies to all Indian residents (not NRIs, who have separate rules).
LRS Annual Limit (2026)
| Parameter | Details |
|---|---|
| Annual LRS Limit | USD 250,000 per individual per financial year (April–March) |
| Who it applies to | All resident Indians (individuals only, not companies) |
| Minors | Can remit under LRS with a natural guardian co-signing |
| Family pooling | Each family member has their own USD 250,000 limit |
| Currency | Any freely convertible foreign currency |
| Frequency | No limit on number of transfers — only annual aggregate limit |
What Can You Send Money For Under LRS?
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Permitted current account transactions
- Education abroad — tuition fees, hostel, living expenses
- Medical treatment — healthcare costs outside India
- Tourism & travel — travel expenses, hotel, forex for personal travel
- Maintenance of relatives abroad — supporting family members living overseas
- Employment abroad — expenses for taking up employment in another country
- Emigration — costs related to emigrating from India
- Gifts & donations — within limits
Permitted capital account transactions
- Opening and maintaining foreign currency accounts abroad
- Purchase of property abroad
- Investment in foreign stocks, bonds, and mutual funds
- Investment in foreign companies (joint ventures, wholly owned subsidiaries)
Not permitted under LRS
- Remittances to countries identified as "non-cooperative" by FATF
- Margins or margin calls to overseas exchanges
- Purchase of lottery tickets, sweep stakes
- Sending to entities on government sanctions lists
TCS on LRS Remittances (2026)
From October 1, 2023, Tax Collected at Source (TCS) applies on LRS remittances above ₹7 lakh per financial year:
| Purpose | TCS Rate (above ₹7 lakh) |
|---|---|
| Education — via loan from financial institution | 0.5% |
| Education — self-funded (no loan) | 5% |
| Medical treatment | 5% |
| All other purposes (travel, maintenance, investment, etc.) | 20% |
How to Send Money Under LRS (Step-by-Step)
Step 1: Choose your purpose
Identify the permitted LRS purpose for your transfer. This determines the TCS rate and documentation required.
Step 2: Fill Form A2
All outward remittances under LRS require Form A2 (Declaration Form for Remittance). Your bank or authorised dealer will provide this. For education and medical transfers, you may also need Form 15CA.
Step 3: Provide PAN
PAN is mandatory for LRS remittances above ₹7 lakh. Banks will link the transfer to your PAN for TCS deduction and annual aggregate tracking.
Step 4: Choose your transfer service
You can remit through authorised dealers (your Indian bank), or through RBI-licensed online remittance services. For best rates, compare Wise, Remitly, and your bank before each transfer.
Step 5: Claim TCS in your ITR
When you file your Income Tax Return, include the TCS deducted under LRS as a tax credit. It will appear in Form 26AS and your AIS (Annual Information Statement).
Frequently Asked Questions
What is the LRS limit for 2026?
The RBI's Liberalised Remittance Scheme (LRS) allows Indian residents to send up to USD 250,000 per financial year (April to March) abroad without prior RBI approval. Each individual has their own limit — a family of 4 can collectively remit up to USD 1 million per year.
Is TCS on LRS remittances refundable?
Yes. TCS collected on LRS remittances is not a final tax. It is credited to your PAN and can be claimed as a tax credit when you file your Income Tax Return (ITR). The credit appears in Form 26AS. Most senders get the full TCS amount back as a refund.
Do I need Form 15CA for LRS remittances?
Form 15CA is required for most LRS remittances that are taxable in India. For education and medical transfers under LRS, a CA-certified Form 15CB may also be required. Your bank or authorized dealer will guide you on the specific documentation needed for your transfer purpose.
Can I send money abroad for investment under LRS?
Yes. LRS permits investment in foreign stocks, bonds, mutual funds, real estate, and foreign companies (joint ventures, wholly owned subsidiaries) up to the USD 250,000 annual limit. Capital gains from these investments may be taxable in India.
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