The Liberalised Remittance Scheme (LRS) is the RBI's scheme that lets every resident individual in India, including minors, send up to $250,000 abroad each financial year (April to March) for permitted purposes such as education, travel, medical treatment, investments, property, family maintenance and gifts.
Remittances up to ₹10 lakh a year attract no TCS. Above that, TCS is 2% for education and medical treatment and 20% for most other purposes, and overseas tour packages attract 2% from the first rupee.
Table of contents
- What is LRS?
- What changed in LRS for 2026?
- What is the LRS limit, and can family members pool it?
- Who can use LRS, and does it apply to NRIs?
- How do you check how much of your LRS limit you have used?
- What happens if you exceed the LRS limit?
- What is the difference between LRS and non-LRS remittances?
- What can you send money abroad for under LRS?
- What is not allowed under LRS?
- How much TCS do you pay on LRS remittances?
- How do you claim back TCS?
- What mistakes should you avoid?
What is LRS?
LRS stands for the Liberalised Remittance Scheme. It is the Reserve Bank of India's scheme, under the Foreign Exchange Management Act (FEMA), that lets resident individuals send money abroad without asking the RBI for approval, up to $250,000 a financial year.
The RBI introduced it on 4 February 2004 with a limit of $25,000 and has raised the limit several times since, to $250,000 in 2015. The rules are set out in the RBI's Master Direction on LRS.
LRS covers both current account transactions, such as travel, education and medical treatment, and capital account transactions, such as buying shares or property abroad. It is open to every resident individual, including minors, and the sections below cover who qualifies, the limit, purpose codes and TCS.
Note: In Telangana, LRS also stands for the Layout Regularisation Scheme, a state scheme for regularising plots and layouts. It has nothing to do with sending money abroad.
What changed in LRS for 2026?
The $250,000 limit has not changed. What changed from 1 April 2026 is the TCS that banks collect, under section 394 of the Income-tax Act 2025 as amended by the Finance Act 2026:
- Education and medical treatment: TCS is 2% on remittances above ₹10 lakh in the year.
- Overseas tour packages: TCS is a flat 2%, with no threshold.
- Education funded by a loan from a financial institution: no TCS.
- All other purposes, including investments, property and gifts: TCS stays at 20% above ₹10 lakh.
There have been reports of an RBI proposal to cap some kinds of remittances within the limit, but nothing has been notified. Paasa's view on the reports is in this piece by our CEO.
What is the LRS limit, and can family members pool it?
The LRS limit is $250,000 per person per financial year, according to the RBI's LRS FAQs.
- One limit across all banks: the limit covers everything you send under LRS in the year, whichever banks you use.
- No top-up once it is used: once you have used the full $250,000 in a financial year, you cannot send more under LRS that year.
- Family pooling: family members can combine their limits, as long as each of them meets the scheme's terms. For capital account remittances, such as investments or property, a family member can pool only if they are a co-owner or co-investor.
- PAN and Form A2: your PAN is mandatory for every LRS remittance, and you declare the purpose on Form A2.
Example. Suppose you and your spouse are buying a flat abroad together for $400,000. As co-owners, you can each send up to $250,000 in the same financial year, so together you can cover the purchase.
Who can use LRS, and does it apply to NRIs?
LRS is only for resident individuals, as defined under FEMA. That includes minors, whose guardian signs the declaration for them. Companies, partnership firms, HUFs and trusts cannot use it.
NRIs cannot remit under LRS. An NRI sends money abroad from an NRE or FCNR account, which is freely repatriable, or from an NRO account, where the RBI allows up to USD 1 million a financial year. Once you return to India and become a resident under FEMA, LRS applies to you.
Paasa's guides on repatriating foreign income and NRE and NRO accounts after returning to India cover the NRI side.
How do you check how much of your LRS limit you have used?
There is no RBI portal that shows how much of your LRS limit is left. Banks report your remittances against your PAN, but you are responsible for staying within $250,000 across all of them. Each time you remit, your bank's LRS declaration asks how much you have already sent under LRS in the financial year, including through other banks.
The simplest check is your own record: note every LRS remittance in the year with its date, bank, purpose and dollar amount. The TCS collected against your PAN, which shows in your annual tax statement and AIS, is a useful cross-check once your remittances cross ₹10 lakh.
What happens if you exceed the LRS limit?
Your bank will not process an LRS remittance that takes you above $250,000 in a financial year. The exceptions are emigration, medical treatment and studies abroad, where the bank can send more based on an estimate from the institution abroad. Anything else above the limit needs the RBI's prior approval.
If you cross the limit by mistake, for example by remitting through two banks without counting both, it is a contravention of FEMA. You can apply to the RBI to compound it, which settles the breach on payment of an amount the RBI sets.
What is the difference between LRS and non-LRS remittances?
An LRS remittance is money a resident individual sends abroad for a personal purpose, such as investing, education or a gift, and it counts towards the $250,000 limit. A non-LRS remittance is an outward payment made under other FEMA rules, so it does not use your limit.
Common non-LRS remittances include payments by businesses for imports or services, overseas investments made by companies, and an NRI's transfers from NRE, FCNR or NRO accounts.
What can you send money abroad for under LRS?
Each remittance is tagged with an RBI purpose code, which you declare on Form A2. The codes below are the ones the RBI maps to each LRS purpose in its circular on reporting under FETERS (A.P. (DIR Series) Circular No. 50 of 11 February 2016). Your bank shows the code that applies on its form.
| Purpose | RBI purpose code | Detailed guide |
|---|---|---|
| Investments abroad (shares, ETFs, bonds) | S0001 (equity), S0002 (debt) | LRS for investments |
| Property abroad | S0005 | LRS for property purchase |
| Education abroad | S0305 (travel for education, including fees and living costs) | LRS for education |
| Medical treatment abroad | S0304 (travel for medical treatment, including one attendant) | LRS for healthcare |
| Travel abroad | S0306 for personal travel, S0301 for business travel, S0303 for pilgrimage | LRS for travel |
| Family maintenance | S1301 | LRS for maintenance |
| Gifts and donations | S1302 (gifts), S1303 (donations) | LRS for gifts and donations |
| Opening a foreign currency account abroad | S0023 | LRS for investments |
You can also open and hold a foreign currency account with a bank abroad for LRS remittances, without the RBI's prior approval.
What is not allowed under LRS?
The RBI's LRS FAQs list remittances that are not permitted, including:
- Margin trading: remittances for margins or margin calls to overseas exchanges or counterparties.
- Foreign exchange trading abroad.
- Lottery and gambling: buying lottery tickets or sweepstakes.
- Non-cooperative countries: remittances to countries the Financial Action Task Force (FATF) identifies as non-cooperative.
How much TCS do you pay on LRS remittances?
Your bank collects TCS (tax collected at source) when your remittances in a financial year go above the threshold. These are the rates from 1 April 2026, under section 394 of the Income-tax Act 2025:
| Purpose | TCS rate |
|---|---|
| Education funded by a loan from a financial institution | Nil |
| Education (other) or medical treatment | Nil up to ₹10 lakh, 2% above ₹10 lakh |
| Overseas tour package | 2%, with no threshold |
| Any other purpose (investments, property, gifts, travel and so on) | Nil up to ₹10 lakh, 20% above ₹10 lakh |
Paasa's TCS guide covers each rate in detail.
Example. Suppose you send ₹25 lakh abroad this financial year to invest in global ETFs, and it is your only LRS remittance.
| Item | Amount |
|---|---|
| Total remitted for investments | ₹25,00,000 |
| Threshold with no TCS | ₹10,00,000 |
| Amount above the threshold | ₹15,00,000 |
| TCS at 20% | ₹3,00,000 |
The result: your bank collects ₹3 lakh as TCS, which you can claim back against your income tax
How do you claim back TCS?
TCS is not an extra tax. It is collected in advance and credited to your PAN:
- Check the credit in your annual tax statement before you file.
- Claim it in your income tax return. It is set off against your tax for the year, and any excess is refunded.
- Adjust it during the year against your advance tax or, if you are salaried, ask your employer to account for it. See Paasa's guide to adjusting TCS against advance tax.
Note: TCS covers only the remittance. The income you earn abroad, such as capital gains, dividends or rent, is taxed separately. If that income is also taxed abroad, India's tax treaties let you claim credit for the foreign tax.
What mistakes should you avoid?
- Using the wrong purpose code: for example, marking a gift as maintenance or an investment as education. This can lead to queries from your bank.
- Pooling family limits without the right ownership: for investments and property, only co-owners can pool their limits.
- Forgetting TCS in your budget: TCS is collected upfront, so plan for it when you pay fees or buy property.
- Assuming every purpose is taxed the same way: foreign shares, rental income and gifts abroad each follow different tax and reporting rules.
- Leaving out Schedule FA: foreign accounts and investments bought under LRS must be disclosed in your tax return. See Paasa's Schedule FA guide.
About Paasa
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