Liberalised Remittance Scheme (LRS): A Practical Guide

The Liberalised Remittance Scheme (LRS) is the framework under which resident individuals in India are permitted to remit funds abroad for a range of permitted current and capital account transactions, subject to an annual limit set by the Reserve Bank of India.

What LRS covers. Common uses include overseas education, travel, medical treatment, maintenance of relatives abroad, gifts, and investment in shares, property, or bank deposits outside India.

How the limit works. The remittance limit applies per financial year, per individual (including minors), and is cumulative across all authorised dealer banks — not per bank. Banks are required to check that a remitter's total LRS remittances across the year, across all banks, stay within the prescribed ceiling.

Purpose codes. Every outward remittance is tagged with an RBI purpose code so that the transaction is correctly classified in India's balance of payments reporting. Common purpose codes cover education, travel, medical treatment, and maintenance of close relatives.

Documentation banks typically ask for. A filled application-cum-declaration form (Form A2), PAN, and supporting documents relevant to the purpose (for example, a university offer letter for education remittances, or an invitation/travel itinerary for travel).

Always confirm the current LRS limit and eligible purposes on the RBI's official website before initiating a remittance, since limits and conditions are revised from time to time.