The Liberalised Remittance Scheme (LRS) is a facility provided by the RBI that allows resident individuals to remit foreign exchange abroad without prior approval, within a prescribed annual limit.
## Key Features
Feature
Details
Annual limit
USD 250,000 per financial year (April – March)
Who is eligible?
All resident individuals, including minors
Purpose
Any permissible current or capital account transaction, or a combination of both
Period
Financial Year (April to March)
## Scope of Inclusion
The LRS limit of USD 250,000 is inclusive of:
Foreign exchange facility for purposes mentioned in Para 1 of Schedule III of Foreign Exchange Management (CAT) Amendment Rules 2015 (dated 26 May 2015).
This means private visits, gifts/donations, going abroad for employment, emigration, maintenance of close relatives abroad, business travel, studies, medical treatment, etc., all fall within this single overall ceiling.
## Special Rule for Minors
The LRS declaration form must be countersigned by the minor's natural guardian.
## Who is NOT eligible for LRS?
The scheme is NOT available to:
Corporates
Partnership firms
HUF (Hindu Undivided Families)
Trusts
Other non-individual entities
> Memory Tip: LRS = Liberty for Resident Individuals (and minors with guardian's signature) – not for entities.
## Connection to Schedule III
LRS is the gateway through which individuals access many transactions that would otherwise require RBI approval. Para 1 of Schedule III items get subsumed within the LRS ceiling of USD 250,000.
Worked example
### Example 1
Example 1: Mr. A, a resident individual, wants to send USD 100,000 to his son studying in the USA for tuition and USD 50,000 as a gift to his brother in Canada in the same financial year. Can he do this under LRS?
Answer: Yes. Total = USD 150,000, which is within the USD 250,000 LRS limit per financial year. No prior RBI approval required.
### Example 2
Example 2: XYZ Pvt. Ltd. wishes to remit USD 100,000 abroad under LRS for an investment. Is this permitted?
Answer: No. LRS is available only to resident individuals (including minors). It is not available to corporates. XYZ Pvt. Ltd. must seek remittance under other applicable FEMA provisions/regulations.
### Example 3
Example 3: Master B, a 12-year-old resident, has inherited funds and wishes to remit USD 50,000 abroad under LRS. What is the procedure?
Answer: Minors are eligible for LRS, but the LRS declaration form must be countersigned by the natural guardian.
⚠️ Common exam mistakes
Assuming LRS is available to companies, firms, HUFs or trusts — it is exclusively for resident individuals (including minors).
Treating the USD 250,000 limit as separate from Schedule III items — Para 1 of Schedule III items are subsumed within the LRS ceiling, not in addition to it.
Forgetting that for minors, the declaration form must be countersigned by the natural guardian.
Confusing the limit period — it is per financial year (April–March), not per calendar year.
Believing LRS can be used for prohibited transactions like remittance to FATF non-cooperative countries — this is expressly barred.
Bare-Act text Section 5 read with Schedule III of FEM (CAT) Rules, 2000 (as amended) · Foreign Exchange Management Act, 1999 / FEM (CAT) Amendment Rules 2015 dated 26 May 2015 · click to expand
Under the Liberalised Remittance Scheme (LRS), all resident individuals, including minors, are allowed to freely remit up to USD 250,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both. This is inclusive of foreign exchange facility for the purposes mentioned in Para 1 of Schedule III of Foreign Exchange Management (CAT) Amendment Rules 2015, dated May 26, 2015. In case of remitter being a minor, the LRS declaration form must be countersigned by the minor's natural guardian. The Scheme is not available to corporates, partnership firms, HUF, Trusts etc.