TMI BlogMaster Direction - Liberalised Remittance Scheme (LRS)(Updated as on December 22, 2023)X X X X Extracts X X X X X X X X Extracts X X X X ..... also issues directions to Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA), 1999 . These directions lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/constituents with a view to implementing the regulations framed. 3. This Master Direction consolidates the existing instructions on the Liberalised Remittance Scheme at one place. Reporting instructions can be found in Master Direction on Reporting ( Master Direction No. 18 dated January 1, 2016 ) 4. It may be noted that, whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the Regulations or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/ constituents. The Master Direction issued herewith shall be amended suitably simultaneously. Yours faithfully, (Puneet Pancholy) Chief General Manager * Since this Master Direction has been significantly amended, it has been replaced rather than showing the changes in track mode for reader convenience. The chan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit of the latter s foreign currency account held abroad under LRS. 5. All other transactions which are otherwise not permissible under FEMA and those in the nature of remittance for margins or margin calls to overseas exchanges/ overseas counterparty are not allowed under the Scheme. 6. The permissible capital account transactions by an individual under LRS are: opening of foreign currency account abroad with a bank; 8 acquisition of immovable property abroad, Overseas Direct Investment (ODI) and Overseas Portfolio Investment (OPI), in accordance with the provisions contained in Foreign Exchange Management (Overseas Investment) Rules, 2022, Foreign Exchange Management (Overseas Investment) Regulations, 2022 and Foreign Exchange Management (Overseas Investment) Directions, 2022; extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 2013 9 . 7. The limit of USD 2,50,000 per Financial Year (FY) under the Scheme also includes/subsumes remittances for current account transactions (viz. private visit; gift/donation; going abroad on employment; emigration; maintenance of relatives abroad; bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isits undertaken during the year. However, if an employee is being deputed by an entity for any of the above and the expenses are borne by the latter, such expenses shall be treated as residual current account transactions outside LRS and may be permitted by the AD without any limit, subject to verifying the bonafides of the transaction. g. Medical treatment abroad Authorised Dealers may release foreign exchange up to an amount of USD 2,50,000 or its equivalent per FY without insisting on any estimate from a hospital/doctor. For amount exceeding the above limit, Authorised Dealers may release foreign exchange under general permission based on the estimate from the doctor in India or hospital/ doctor abroad. A person who has fallen sick after proceeding abroad may also be released foreign exchange by an Authorised Dealer (without seeking prior approval of the Reserve Bank of India) for medical treatment outside India. In addition to the above, an amount up to USD 250,000 per financial year is allowed to a person for accompanying as attendant to a patient going abroad for medical treatment/check-up. h. Facilities available to students for pursuing their studies abro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Foreign Exchange Management (Current Account Transaction) Rules, 2000, dated May 3, 2000, as amended from time to time. 14. The Scheme is not available for capital account remittances to countries identified by Financial Action Task Force (FATF) as non-co-operative countries and territories as available on FATF website www.fatf-gafi.org or as notified by the Reserve Bank. Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks is also not permitted. 15. Documentation by the remitter The individual will have to designate a branch of an AD through which all the remittances under the Scheme will be made. The resident individual seeking to make the remittance should furnish 14 Form A2 as at Annex for purchase of foreign exchange under LRS. 16. It is mandatory for the resident individual to provide his/her Permanent Account Number (PAN) to make remittance under the Scheme. 15 17. Investor, who has remitted funds under LRS can retain, reinvest the income earned on the investments. The received/realised/unspent/unused foreign exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dges. (v) the loan amount should be credited to the NRO a/c of the NRI / PIO. Credit of such loan amount may be treated as an eligible credit to NRO a/c; (vi) the loan amount shall not be remitted outside India; and (vii) repayment of loan shall be made by way of inward remittances through normal banking channels or by debit to the Non-resident Ordinary (NRO) / Non-resident External (NRE) / Foreign Currency Non-resident (FCNR) account of the borrower or out of the sale proceeds of the shares or securities or immovable property against which such loan was granted. 19. A resident individual can make a rupee gift to a NRI/PIO who is a relative of the resident individual [ relative as defined in Section 2(77) of the Companies Act, 2013 19 ] by way of crossed cheque /electronic transfer. The amount should be credited to the Non-Resident (Ordinary) Rupee Account (NRO) a/c of the NRI / PIO and credit of such gift amount may be treated as an eligible credit to NRO a/c. The gift amount would be within the overall limit of USD 250,000 per FY as permitted under the LRS for a resident individual. It would be the responsibility of the resident donor to ensure that the gift amount i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in force while allowing the facility. 7. The applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittances for capital account transactions. If the applicant seeking to make the remittances is a new customer of the bank, Authorised Dealers should carry out due diligence on the opening, operation and maintenance of the account. Further, the Authorised Dealers should obtain bank statement for the previous year from the applicant to satisfy themselves regarding the source of funds. If such a bank statement is not available, copies of the latest Income Tax Assessment Order or Return filed by the applicant may be obtained. 8. The Authorised Dealer should ensure that the payment is received out of funds belonging to the person seeking to make the remittances, by a cheque drawn on the applicant s bank account or by debit to his account or by Demand Draft / Pay Order. Authorised Dealer may also accept the payment through credit /debit/prepaid card of the card holder. 9. The Authorised Dealer should certify that the remittance is not being made directly or indirectly by /or to ineligible entities and that the remittances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eries Circular 50 dated 11.02.16. Prior to insertion it read as Annex 1-Form A2 2 Omitted as Application cum Declaration for purchase of foreign exchange under the Liberalised Remittance Scheme of USD 2,50, 000 has since been discontinued vide AP (Dir) Series Circular 50 dated 11.02.16. 3 Omitted 4 Inserted vide AP (Dir Series) circular 50 dated February 11, 2016. Prior to insertion this read as the LRS declaration form. 5 Deleted with effect from August 22, 2022 to align the directions with the provisions contained in Foreign Exchange Management (Overseas Investment) Rules, 2022, Foreign Exchange Management (Overseas Investment) Regulations, 2022 and Foreign Exchange Management (Overseas Investment) Directions, 2022. Prior to deletion it read as purchase of property . 6 Deleted with effect from August 22, 2022 to align the directions with the provisions contained in Foreign Exchange Management (Overseas Investment) Rules, 2022, Foreign Exchange Management (Overseas Investment) Regulations, 2022 and Foreign Exchange Management (Overseas Investment) Directions, 2022. Prior to deletion it read as property . 7 Inserted with effect from August 22, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Prior to insertion it read as Form A-2 as at Annex-1 and Application-cum-Declaration for purchase of foreign exchange under LRS as per Annex-2 15 Modified with effect from June 19, 2018 as indicated vide AP (DIR) Series Circular No. 32 dated June 19, 2018. Prior to modification it read as It is mandatory to have PAN card to make remittances under the Scheme for capital account transactions. However, PAN card need not be insisted upon for remittances made towards permissible current account transactions up to USD 25,000 . 16 Modified with effect from August 24, 2022 to align the directions with Regulation 7 of Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015 [Notification No. FEMA 9(R)/2015-RB]. Prior to modification it read as At present, the resident individual is not required to repatriate the funds or income generated out of investments made under the Scheme 17 Modified with effect from August 22, 2022 to align the directions with the provisions contained in Foreign Exchange Management (Overseas Investment) Rules, 2022, Foreign Exchange Management (Overseas Investment) Regulations, 2022 and Foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X
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