II. Guidelines on Remittance Matters

 

Q15. Liberalised Remittance Scheme (LRS) of USD 125,000 & What is the Liberalised Remittance Scheme of USD 125,000 ?

 

Ans. Under the Liberalised Remittance Scheme, all resident individuals, including minors, are allowed to freely remit up to USD 125,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both. The limit was reduced from USD.200,000 to USD.75,000 with effect from August 14, 2013 but was subsequently increased to USD 125,000 w.e.f June 3, 2014.

 

Q.16. How much foreign exchange can one resident individual send as gift / donation to a person resident outside India?

 

Ans. Any resident individual, if he so desires, may remit the entire limit of USD 125,000 in one financial year under LRS as gift to a person residing outside India or as donation to a charitable/educational/ religious/cultural organization outside India. Remittances exceeding the limit of USD 125,000 will require prior permission from the Reserve Bank.

 

Q.17. Whether LRS facility available is in addition to existing facilities detailed in Schedule III under remittances?

 

Ans. The facility under the Scheme is in addition to those already available for private travel, business travel, studies, medical treatment, etc., as described in Schedule III of Foreign Exchange Management (Current Account Transactions) Rules, 2000. The Scheme can also be used for these purposes.

However, gift and donation remittances cannot be made separately and have to be made under the Scheme only. Accordingly, resident individuals can remit gifts and donations up to USD 125,000 per financial year under the Scheme.

Further, a resident individual can give rupee gifts to his visiting NRI/PIO close relatives [means relative as defined in Section 6 of the Companies Act, 1956] by way of crossed cheque/electronic transfer within the overall limit of USD 125,000 per financial year for the resident individual and the gifted amount should be credited to the beneficiary’s NRO account. An individual resident can lend money by way of crossed cheque /electronic transfer to a Non resident Indian (NRI)/ Person of Indian Origin (PIO) close relative [means relative as defined in Section 6 of the Companies Act, 1956] within the overall limit of USD 125,000 per financial year under the Liberalised Remittance Scheme, to meet the borrower’s personal or business requirements in India, subject to conditions. The loan should be interest free and have a maturity of minimum one year and cannot be remitted outside India.

 

Q.18. Can remittances under this facility be consolidated in respect of family members?

 

Ans. Remittances under the facility can be consolidated in respect of family members subject to the individual family members complying with the terms and conditions of the Scheme.

 

Q.19. Is it mandatory for resident individuals to have Permanant Account (PAN) number for sending outward remittances under the Scheme?

 

Ans. It is mandatory to have PAN number to make remittances under the Scheme.

 

Q.20. Can remittances be made only in US Dollar?

 

Ans. The remittances can be made in any freely convertible foreign currency equivalent to USD 125,000 in a financial year.

 

 

A 'person residing in India' is defined in Section 2(v) of FEMA, 1999 as :

A person residing in India for more than 182 days during the course of the preceding financial year but does not include
(A) a person who has gone out of India or who is stays outside India, in either case -
for or on taking up an employment outside India, or
for carrying on outside India a business or vocation outside India, or
for any other purpose, in such circumstances as would indicate his intention to stay outside India for an uncertain period;

 

(B) a person who has come in to or stays in India, in either case, otherwise than are -
for or on taking up employment / work in India , or for carrying or undergo in India a business or vocation in India, or
for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period any person or body corporate registered or incorporated in India,
an office, branch or agency in India owned or controlled by a person residing outside of India,
an office, branch or agency outside India owned or controlled by a person residing in India.