Master Direction - Liberalised Remittance Scheme (LRS)

How Much Dollar or Foriegn Fund Can we Invest in other Countries ?

Well government through 'Liberalised Remittance Scheme' has given directions how much dollar you can invest in foriegn currency. That means it can be in USA Dollars or Euros or in Pounds.

Master Direction

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)

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. TheMaster Direction issued herewith shall be amended suitably simultaneously.

 

https://rbi.org.in/Scripts/NotificationUser.aspx?Id=10192&Mode=0

 

A. Liberalised Remittance Scheme (LRS) of USD 2,50,000 for resident individuals:

1. Under the Liberalised Remittance Scheme, Authorised Dealers may freely allow remittances by resident individuals up to USD 2,50,000 per Financial Year (April-March) for any permitted current or capital account transaction or a combination of both. The Scheme is not available to corporates, partnership firms, HUF, Trusts, etc.

2. The LRS limit has been revised in stages consistent with prevailing macro and micro economic conditions. During the period from February 4, 2004 till date, the LRS limit has been revised as under:

(Amount in USD)
Date Feb 4, 2004 Dec 20, 2006 May 8, 2007 Sep 26, 2007 Aug 14, 2013 Jun 3, 2014 May 26, 2015
LRS limit (USD) 25,000 50,000 1,00,000 2,00,000 75,000 1,25,000 2,50,000

3. The Scheme is available to all resident individuals including minors.  In case of remitter being a minor, the Form A2 must be countersigned by the minor’s natural guardian.

4. Remittances under the Scheme can be consolidated in respect of family members subject to individual family members complying with its terms and conditions. However, clubbing is not permitted by other family members for capital account transactions such as opening a bank account/investment/purchase of property, if they are not the co-owners/co-partners of the overseas bank account/ investment/property. Further, a resident cannot gift to another resident, in foreign currency, for the credit 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;

  1. purchase of property abroad;

  2. making investments abroad- acquisition and holding shares of both listed and unlisted overseas company or debt instruments; acquisition of ESOPs (the Scheme is in addition to acquisition of ESOPs linked to ADR / GDR and acquisition of qualification shares); investment in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes;

  3. setting up Wholly Owned Subsidiaries and Joint Ventures (with effect from August 05, 2013) outside India for bonafide business subject to the terms & conditions stipulated in Notification No FEMA.263/ RB-2013 dated March 5, 2013;

  4. extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 1956.

NCON

Author: NCON

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