Lesson 1 of 3 · GIFT City Advanced — LRS, TCS & Reporting

LRS in Detail — Limits, Permitted and Prohibited Uses

The Liberalised Remittance Scheme (LRS) is the RBI framework through which a resident individual sends money abroad, including to the GIFT IFSC. This lesson covers who may use it, how the annual limit is counted, when family limits can be combined, what is prohibited, and the 180-day rule.

Fact-checked 8 October 20263 practice questions in the game

What it is

LRS is RBI's framework under Schedule III to the Foreign Exchange Management (Current Account Transactions) Rules, 2000. It lets a resident individual, including a minor, remit up to USD 250,000 in a financial year (as at October 2026). PAN is mandatory.

The limit covers permitted current-account and capital-account transactions together. Current-account transactions are payments such as education fees or medical treatment abroad. Capital-account transactions create an asset abroad, such as listed overseas shares or immovable property.

How the limit is counted

The limit is counted on what is sent out during the financial year, not on the net amount held abroad. Once it has been used, no further remittance is possible in that year, even if the proceeds of the earlier investment are brought back to India.

Each resident individual has a separate limit. Family members may consolidate their remittances, but for a capital-account transaction such as an investment, clubbing is not permitted unless the other members are co-owners of what is bought. Being related is not enough.

What is prohibited

LRS may not be used for margin or margin calls to overseas exchanges, lottery tickets, banned items, trading in foreign exchange abroad, or remittances to countries identified by the Financial Action Task Force (FATF) as non-cooperative.

There is no general prohibition on real estate: immovable property abroad may be bought under LRS.

The 180-day rule

Foreign exchange that is unused, or realised from a sale abroad, must be repatriated to India or reinvested within 180 days. Money sent abroad is meant to be used for a permitted purpose, not left lying unused overseas.

Rules at a glance

Legal basisSchedule III to the Foreign Exchange Management (Current Account Transactions) Rules, 2000RBI — Liberalised Remittance Scheme

LimitUSD 250,000 per resident individual, including a minor, per financial year; PAN mandatoryRBI — Liberalised Remittance Scheme; as at October 2026

Clubbing of family limitsFor capital-account investments, only if the other members are co-ownersRBI — Liberalised Remittance Scheme

Used limitNot restored by bringing proceeds back in the same financial yearRBI — Liberalised Remittance Scheme

Unused or realised foreign exchangeRepatriate or reinvest within 180 daysRBI — Liberalised Remittance Scheme

Illustration

Permitted and prohibited, side by side

Ananya, 33, a resident in Pune, plans two remittances. The first is to buy listed shares on an overseas stock exchange. The second is to fund a margin account for trading derivatives on an overseas exchange.

The first is a permitted capital-account transaction within her limit. The second is prohibited: LRS may not be used for margin or margin calls to overseas exchanges, however small the amount.

Worked example

Counting the limit

Three resident members of a family each have a limit of USD 250,000 for the financial year. If all three are co-owners of a property abroad, they may club their limits for it: 3 × 250,000 = USD 750,000.
If only one of them is to own the property, clubbing is not permitted and the most that can be sent for it is that person's USD 250,000.
Separately, one member remits USD 250,000 in June to buy listed shares, sells them in December and brings USD 260,000 back to India. Limit used in that financial year: USD 250,000. Limit remaining: 250,000 − 250,000 = nil.

Result. Clubbing depends on co-ownership, and the limit is counted on money sent out. The member who brought USD 260,000 back cannot remit again under LRS until the next financial year. All amounts are assumptions for the example.

Key points

LRS lets every resident individual, including a minor, remit up to USD 250,000 in a financial year for permitted current- and capital-account transactions; PAN is mandatory.
Bringing proceeds back to India does not restore a limit already used in that financial year.
Family limits cannot be clubbed for a capital-account investment unless the other members are co-owners.
Prohibited: margin or margin calls to overseas exchanges, lottery tickets, banned items, trading in foreign exchange abroad, and remittances to FATF non-cooperative countries.
Unused or realised foreign exchange must be repatriated or reinvested within 180 days.

Common misunderstandings

The limit is not a net figure: bringing money back does not free up room in the same financial year.
Buying immovable property abroad is not prohibited under LRS; paying margin to an overseas exchange is.
Relatives cannot simply pool their limits for an investment: the others must be co-owners of it.

Questions people ask

Does a minor have an LRS limit?

Yes. LRS is available to every resident individual, including a minor.

Is money sent to the GIFT IFSC counted under LRS?

Yes. An IFSC unit is treated as a person resident outside India for exchange control, so the remittance counts towards the same annual limit.

Does the limit cover education fees as well as investments?

Yes. It covers permitted current-account and capital-account transactions taken together.

What this lesson relies on

Foreign Exchange Management (Current Account Transactions) Rules, 2000 — Schedule III
RBI — Liberalised Remittance Scheme (RBI FAQ on LRS)

This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.