TL;DR
Resident Indians can send up to USD 250,000 per financial year (April–March) to the USA or any other country under the RBI's Liberalized Remittance Scheme (LRS), for permitted current and capital account purposes. Remittances above INR 7 lakh per year attract Tax Collected at Source (TCS). Certain purposes are not permitted under LRS, and amounts above the annual cap require RBI approval.
What Is the Liberalized Remittance Scheme (LRS)?
The Liberalized Remittance Scheme (LRS) is an RBI policy framework that permits resident Indian individuals (not corporations) to freely remit foreign exchange up to a specified annual limit for a broad range of current and capital account transactions. Introduced in 2004 and revised multiple times since, LRS represents India's policy of progressively liberalizing personal capital account transactions while maintaining macroeconomic stability. All LRS remittances must be executed through an Authorized Dealer (AD) bank — an RBI-authorized foreign exchange dealer, which includes all major Indian commercial banks.
The USD 250,000 Annual LRS Limit
The current LRS limit is USD 250,000 per resident individual per financial year. This limit applies on a cumulative basis across all LRS remittances from the individual during the April–March financial year, regardless of purpose. Two individuals — such as a married couple — each have their own separate USD 250,000 limit, enabling a combined remittance of up to USD 500,000 per year. Minors may also remit under LRS with the natural guardian's countersignature, using the minor's own separate USD 250,000 annual limit.
The limit has been revised upward several times from its original level, reflecting India's growing foreign exchange reserves and the RBI's increasing comfort with capital account liberalization. Historically, the limit was temporarily reduced during periods of sharp rupee depreciation or balance of payments stress; check the current RBI notification for the limit applicable at the time of your intended remittance.
Permitted Purposes Under LRS
LRS covers a wide range of purposes including: private visits abroad; gifts or donations to relatives or non-relatives abroad; emigration expenses; maintenance of close relatives abroad (including parents, children, and dependent siblings); education and medical treatment abroad; travel for business, conference, or employment abroad; opening and maintaining a foreign currency account abroad; purchase of property abroad; making investments abroad (equity, debt, and business); and any current account transaction permissible under FEMA. Maintenance of relatives abroad — the most common purpose for US-India remittances — is explicitly permitted and requires only the standard LRS documentation at the bank.
Prohibited Purposes Under LRS
LRS does not permit remittances for: trading in foreign exchange abroad; capital account transactions not specifically permitted under LRS; purchase of Foreign Currency Convertible Bonds (FCCBs) issued by Indian companies; remittances to countries identified by the Financial Action Task Force (FATF) as non-cooperative; and purchase of lottery tickets, sweepstakes, or similar instruments. Remittances to facilitate margin trading or speculative positions in foreign financial markets are also not permitted under LRS.
Tax Collected at Source (TCS) on LRS Remittances
Since October 2020, and with enhanced rates effective October 2023, Indian banks collect TCS on LRS remittances. The applicable TCS rate depends on the purpose and amount. For most LRS purposes (gifts, maintenance of relatives, investments), the TCS rate is 20% on amounts above INR 7 lakh per year (approximately USD 8,400). For education remittances funded by educational loans, a lower 0.5% rate applies on amounts above INR 7 lakh; education remittances not funded by loans attract a 5% rate above the threshold. Medical treatment remittances attract a lower rate.
TCS is an advance tax collection mechanism, not an additional tax. The TCS collected is credited to the remitter's PAN and is adjustable against their final Indian income tax liability for the year, or refundable if the remitter is below the taxable income threshold. The effective cost depends on the remitter's tax position: for those who file Indian income tax returns, TCS is largely a cash-flow timing issue rather than a permanent cost.
LRS Documentation and Bank Procedures
To execute an LRS remittance, the individual must: submit Form A2 (the remittance declaration form) to the Authorized Dealer bank; provide self-declaration of purpose; furnish PAN details; and comply with the bank's KYC requirements. Banks are required to verify that the remittance is for a permitted purpose, that the annual LRS limit has not been exceeded for the financial year, and that all compliance documentation is in order. The bank reports all LRS transactions to the RBI.
What If You Need to Send More Than USD 250,000?
Amounts above the USD 250,000 LRS annual limit require prior RBI approval and are not freely remittable. Approvals are considered on a case-by-case basis for specific transactions. For NRIs (who are not resident Indians), LRS limits do not apply — NRIs are not governed by LRS as they earn income outside India, and can repatriate funds from their NRE/NRO accounts under the applicable repatriation limits instead.
Frequently Asked Questions
What is the maximum money transfer limit from India to the USA per year?
Resident Indians can remit up to USD 250,000 per financial year (April–March) to the USA and other countries under the LRS. This is a per-person annual limit; married couples can each send up to USD 250,000 separately. Amounts above this require RBI approval.
What is the LRS in India?
The Liberalized Remittance Scheme (LRS) is an RBI framework that permits resident individuals (not companies) to freely remit foreign exchange up to USD 250,000 per financial year for permitted current and capital account purposes. All LRS transfers must go through an RBI-authorized dealer bank.
Does the LRS limit apply to NRIs?
No. LRS applies only to resident Indians. NRIs are governed by different FEMA provisions and can repatriate funds from their NRO accounts up to USD 1 million per year (with tax clearance) and freely from their NRE accounts, without the USD 250,000 LRS cap.
What is TCS on LRS remittances and do I have to pay it?
TCS (Tax Collected at Source) is collected by the authorized dealer bank on LRS remittances above INR 7 lakh per year. The standard rate (for gifts, investments, maintenance) is 20% above the INR 7 lakh threshold. TCS is an advance tax, not an additional cost — it is adjustable against your final Indian tax liability or refundable.
Can I send money from India to the USA to my son or daughter who is an Indian student?
Yes, education abroad is a specifically permitted LRS purpose. The TCS rate on education remittances funded by educational loans is 0.5% above INR 7 lakh; without an educational loan, it is 5% above INR 7 lakh. The remittance must be through an authorized dealer bank with proper Form A2 documentation.
Can I invest in US stocks from India using LRS?
Yes. Investment in foreign equities, mutual funds, ETFs, and other financial instruments abroad is a permitted LRS purpose. The standard TCS rate (20% above INR 7 lakh per year for amounts not covered by the lower rate categories) applies. Several Indian brokerage platforms offer facilitated US stock investment programs utilizing LRS.
How does the bank know if I have already used part of my LRS limit?
The bank through which you initiate the LRS transfer checks against its records and your self-declaration of LRS utilization in the current financial year. All authorized dealer banks report LRS transactions to the RBI, which maintains a consolidated database. Banks are responsible for ensuring the annual limit is not exceeded.
