What changed
The per-person remittance cap under the Liberalised Remittance Scheme was doubled from USD 25,000 per calendar year to USD 50,000 per financial year (April-March). The earlier separate limits of USD 5,000 per annum for gifts and donations, and the 10% reciprocal shareholding condition for overseas investments, have been removed; all such transactions now fall under the single USD 50,000 limit. The private visit travel allowance of up to USD 10,000 per calendar year is now available on a financial year basis instead of calendar year.
What it means for you
Banks can now process higher outward remittances for resident individuals without needing additional RBI approval, simplifying compliance. The unified limit reduces the need to track multiple sub-limits for gifts, donations, and investments, lowering operational complexity. However, banks must ensure that remittances for prohibited purposes (e.g., trading in derivatives abroad) are not allowed, and must report quarterly data to RBI.
What you must do
- Update internal systems to reflect the new USD 50,000 per financial year limit for LRS transactions.
- Train staff to accept the revised Application-cum-Declaration form (Annex-1) and verify that total remittances per individual do not exceed the annual cap.
- Submit quarterly reports to RBI in the prescribed format (Annex-2) within 10 days of the reporting quarter, and may send a soft copy in Excel by email.
- Ensure that any bank (Indian or foreign) without operational presence in India soliciting deposits or marketing schemes in India obtains prior RBI approval, as per earlier circulars.
Who it affects
Resident individuals seeking to remit funds abroad for education, travel, investment, gifts, or donations, AD Category I banks processing outward remittances, Banks (Indian and foreign) without operational presence in India marketing deposit or investment schemes in India
Does the new USD 50,000 limit include gifts and donations?
Yes, the earlier separate limits of USD 5,000 per annum for gifts and donations are now subsumed under the unified USD 50,000 per financial year limit. Any remittance for these purposes counts toward the overall cap.
What about overseas investments in companies that have Indian shareholding?
The requirement that the overseas company must have at least 10% reciprocal shareholding in a listed Indian company has been removed. Such investments are now allowed under the USD 50,000 LRS limit without that condition.
How should banks report LRS transactions to RBI?
Banks must submit quarterly data on the number of applicants and total amount remitted under the scheme, using the format in Annex-2, within 10 days of the reporting quarter. A soft copy in Excel may also be emailed to the Foreign Exchange Department.