## Schedule III – Limits for Persons Other Than Individuals (Companies, Firms, etc.)

For entities (companies, partnership firms, LLPs, trusts etc.), Schedule III prescribes purpose-wise limits beyond which RBI approval is required. The USD 2,50,000 LRS limit (which is for individuals) is irrelevant here.

### Permissible Drawals & Limits

#### 1. Donations (per FY)

Aggregate of donations for the following – up to 1% of the forex earnings during the last 3 FYs OR USD 5 million, whichever is less:

Creation of chair in reputed educational institutes
Contribution to funds promoted by educational institutions
Contribution to a technical institution / body / association in the field of activity of the donor for research

#### 2. Commission on Real Estate Sales

Commission to agents abroad for sale of:

Residential flats / commercial plots in India

Limit: USD 25,000 OR 5% of the inward remittance per transaction, whichever is higher.

#### 3. Consultancy Services Procured from Abroad

Infrastructure projects: up to USD 10 million per project
Other consultancy projects: up to USD 1 million per project

#### 4. Reimbursement of Pre-Incorporation Expenses

Up to 5% of investment brought into India OR USD 1,00,000, whichever is higher.

### Important Notes

1. The USD 2,50,000 LRS limit is irrelevant for persons other than individuals.

2. If a current account transaction is not listed in any of the three Schedules (I, II, III), it is freely permitted.

Worked example

### Example 1

Example 1: XYZ Ltd. earned forex of USD 200 million, USD 250 million and USD 300 million in the last three FYs. It wants to donate USD 6 million to a foreign technical institute. Permissible?

Answer: 1% of forex earnings of last 3 FYs = 1% × (200+250+300) = USD 7.5 million. Lower of USD 7.5 million and USD 5 million ceiling = USD 5 million. The proposed donation of USD 6 million exceeds this limit; RBI approval is required for the excess.

### Example 2

Example 2: ABC Builders sold a flat in India to a foreign buyer for USD 4,00,000 (inward remittance) and wants to pay a 6% commission to its overseas agent. Can it remit USD 24,000?

Answer: Limit = higher of USD 25,000 or 5% of USD 4,00,000 = higher of USD 25,000 or USD 20,000 = USD 25,000. So USD 24,000 is within the limit – freely permitted.

### Example 3

Example 3: An infrastructure company hires a foreign consultant for an expressway project at USD 12 million. Allowed?

Answer: The cap for infrastructure consultancy is USD 10 million per project. The USD 2 million excess needs prior RBI approval.

### Example 4

Example 4: A new Indian company received foreign investment of USD 10 million. Its pre-incorporation expenses to be reimbursed abroad are USD 4,00,000. Permissible?

Answer: Limit = higher of 5% × USD 10 million (= USD 5,00,000) and USD 1,00,000 = USD 5,00,000. The USD 4,00,000 reimbursement is within the limit; no RBI approval needed.

⚠️ Common exam mistakes

Applying the USD 2,50,000 LRS limit to companies – LRS is only for individuals.
Using 'whichever is higher' for donations where the rule actually says 'whichever is less'.
Mixing up the higher/lower criteria for commission (higher of the two) vs donations (lower of the two).
Forgetting that consultancy limits are per project, not per FY.
Assuming pre-incorporation reimbursement is open-ended – it is capped at 5% of investment or USD 1,00,000 whichever is higher.

Bare-Act text Schedule III, Part B / Item 2 · FEM (Current Account Transactions) Rules, 2000 (as amended) · click to expand

Schedule III – Facilities for persons other than individual – The following remittances by persons other than individuals shall require prior approval of the Reserve Bank of India if they exceed the prescribed limits…

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Schedule III - Drawal of Forex by Persons Other Than Individuals

Worked example

⚠️ Common exam mistakes