In short: LRS remittance TCS NRI rules India affect who can send money abroad and how much tax is collected at source. Resident Indians can remit up to USD 250,000 per year under LRS; NRIs cannot use LRS at all and instead repatriate funds through NRE, NRO, or FCNR accounts — each with different limits and tax rules.
Key points
- The Liberalised Remittance Scheme (LRS) is open only to resident individuals under FEMA, 1999 — including minors with a guardian’s countersignature — and is not available to corporates, HUFs, partnership firms, or trusts.
- The annual LRS limit is USD 250,000 per person per financial year (April–March); using multiple banks does not increase this limit because all transactions are reported to RBI under your PAN.
- NRIs cannot use LRS and are not liable to pay TCS when remitting money from India; they repatriate funds through NRE, NRO, or FCNR accounts under separate FEMA rules.
- NRO account repatriation is capped at USD 1 million per financial year from all NRO accounts combined, and requires tax compliance and documentation before funds can be sent abroad.
- NRE and FCNR accounts allow full, unrestricted repatriation of principal and interest with no annual ceiling.
- Certain transfers are flatly prohibited under LRS — including remittances for lottery-type schemes, margin calls to overseas exchanges, and trading in foreign exchange abroad.
What is LRS and who can actually use it?
The Liberalised Remittance Scheme was introduced by the Reserve Bank of India on 4 February 2004, originally with a limit of USD 25,000. The limit has been revised upward over the years and now stands at USD 250,000 per financial year.
LRS is available to all resident individuals as defined under the Foreign Exchange Management Act, 1999 (FEMA). This includes minors, provided the LRS declaration is countersigned by a natural guardian. It does not extend to companies, partnership firms, Hindu Undivided Families, or trusts.
The USD 250,000 ceiling is a personal limit, not an account-level or bank-level limit. RBI tracks every LRS transaction using your PAN. Splitting remittances across two or three banks will not give you a higher aggregate limit — all transactions are pooled and reported.
What can you send money for under LRS?
LRS covers a wide range of permissible current and capital account transactions — or a combination of both. Common uses include overseas education, travel, medical treatment, gifts, maintenance of relatives abroad, and investment in foreign securities.
However, RBI has carved out explicit prohibitions. You cannot use LRS for remittances related to lottery-type schemes, margin or margin calls to overseas exchanges or counterparties, purchase of certain Foreign Currency Convertible Bonds in overseas secondary markets, or trading in foreign exchange abroad.
Does your annual LRS limit reset if money comes back to India?
No. Once you exhaust the USD 250,000 limit in a financial year, that is it for the year — even if investment proceeds flow back to your Indian account. Repatriated funds do not replenish your LRS quota. This is one of the most common misunderstandings among first-time overseas investors.
NRIs and LRS remittance TCS NRI rules India: a completely different regime
If you are a Non-Resident Indian, LRS simply does not apply to you. NRIs are not considered resident individuals under FEMA, so they have no LRS facility — and, importantly, they are also not liable to pay Tax Collected at Source (TCS) on remittances from India under the LRS framework.
Instead, NRIs work with three types of accounts — NRE, NRO, and FCNR — each designed for a different purpose and carrying different repatriation rights.
NRE, NRO, and FCNR accounts: what each one means for sending money abroad
| Account type | Purpose | Repatriation of principal | Repatriation of interest | Taxability of interest in India | Annual repatriation limit |
|---|---|---|---|---|---|
| NRE (Non-Resident External) | Income earned outside India | Fully repatriable | Fully repatriable | Not taxable in India | No ceiling |
| NRO (Non-Resident Ordinary) | Income earned in India (rent, dividends, pension) | Up to USD 1 million per financial year (all NRO accounts combined) | Fully repatriable after tax | Taxable in India | USD 1 million per financial year |
| FCNR (Foreign Currency Non-Resident) | Fixed deposits held in foreign currency | Fully repatriable | Fully repatriable | Not taxable in India | No ceiling |
The NRO account — what banks often gloss over
The NRO account is where most NRIs park Indian-source income: rent from a property in Mumbai, dividends from Indian shares, a pension from a former employer. The money in it is in rupees and has been earned in India.
To send that money abroad, you must clear a documentation and tax compliance hurdle first. Repatriation from an NRO account requires tax clearances and specific procedural formalities. Only after those are satisfied — and only up to the USD 1 million annual ceiling across all your NRO accounts combined — can the funds leave India.
This limit and paperwork requirement catches many NRIs off-guard, particularly those selling property in India and expecting to move the proceeds overseas quickly.
NRE and FCNR: the simpler path
Money in an NRE or FCNR account can be fully repatriated without any annual ceiling. Because NRE accounts hold foreign-earned income converted to rupees, and FCNR accounts hold deposits in foreign currency itself, neither carries the same tax burden or repatriation cap as the NRO account. The interest on NRE accounts is also not taxable in India, which is one reason many NRIs prefer to route foreign earnings through an NRE account rather than an NRO account.
What is TCS on LRS remittances and does it apply to NRIs?
Tax Collected at Source (TCS) is collected by the bank or authorised dealer at the time you make an LRS remittance. The applicable rate depends on the purpose of the remittance and whether it crosses a threshold amount, and the rules around these rates have changed — so verify the current rates directly with your bank or the Income Tax Department before transacting.
The key point: TCS is not a final tax. It is credited to your PAN and can be claimed as a credit when you file your income tax return, or set off against other tax liabilities. It is a cash-flow cost, not a permanent loss.
As noted above, NRIs remitting from their NRE, NRO, or FCNR accounts are not subject to LRS and therefore do not attract LRS-linked TCS. Their tax obligations, if any, arise under the income tax provisions applicable to NRIs — a separate question from LRS.
For a broader look at how Indian tax and financial regulations intersect with cross-border living, see the related guides in our Law for You section, which covers FEMA compliance, NRI property rights, and more in plain language.
Practical steps before you remit
Whether you are a resident Indian using LRS or an NRI repatriating from an NRO account, a few steps apply in every case. First, ensure your PAN is linked to the account from which the remittance originates — it is mandatory under LRS and expected for NRO repatriation paperwork. Second, confirm the purpose of remittance falls within permitted categories. Third, if you are repatriating from an NRO account, collect your tax clearance documents and any certificates required by the bank before initiating the transfer, rather than after.
Frequently asked questions
Can an NRI use LRS to send money from India to a foreign account?
No. LRS is available only to resident individuals as defined under FEMA, 1999. NRIs fall outside this definition and cannot use LRS. They must instead repatriate funds through their NRE, NRO, or FCNR accounts under the rules applicable to those account types. Because NRIs do not use LRS, they are also not liable to pay TCS under the LRS framework when remitting from India.
If I send USD 250,000 abroad and some of it returns to India, can I remit again in the same year?
No. The USD 250,000 LRS limit is a one-way annual ceiling. Once you have used it in a financial year (April–March), no further outward remittances under LRS are permitted for that year, regardless of whether any investment proceeds or other funds flow back into your Indian account. Repatriated money does not reset or replenish your LRS quota.
How much can an NRI repatriate from an NRO account in one year?
NRIs can generally repatriate up to USD 1 million per financial year from all their NRO accounts combined, subject to FEMA regulations, RBI directions, applicable tax compliance, and documentation requirements in force at the time. NRE and FCNR accounts carry no such annual ceiling — funds in those accounts can be fully repatriated without limit.
This article is for general information only and is not legal advice. Laws change; verify against the primary sources cited and consult a qualified advocate for your situation.
