LRS scheme: Rise in overseas remittances by Indians in FY23

The Ministry of Finance notified the Foreign Exchange Management (Current Account Transactions) (Amendment) Rules, 2023, to include international credit card payments in the Liberalised Remittance Scheme (LRS). Any remittance beyond $2.5 lakh or its equivalent in foreign currency would require approval from the RBI.

What is RBI’s Liberalised Remittance Scheme (LRS)?

• The Liberalised Remittance Scheme (LRS) is part of the Foreign Exchange Management Act (FEMA) 1999 which lays down the guidelines for outward remittance from India.
• The scheme allows Indian residents to remit funds abroad for various specified purposes without any restrictions or prior approval from the RBI.
• It has several advantages but is subject to certain eligibility criteria which should be considered carefully.
• Eligibility: In order to avail the benefit of the LRS, the individual must be an Indian resident as defined under the Foreign Exchange Management Act (FEMA).
• Objective:
  • to liberalize the existing foreign exchange regulations and facilitate the smooth transfer of funds abroad by Indian residents
  • to promote and encourage non-residents to invest in India and promote outward remittances from India