If you have got a toddler learning overseas or if you’re planning an abroad vacation, then the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India (RBI) applies to you.
Under LRS, all resident people, together with minors, can remit as much as $2,50,000 per monetary yr for any permissible transaction. There are not any restrictions on the frequency of remittances, and in addition no transaction-specific sub-limits below LRS.
Among the permitted transactions for which international change could be remitted, are non-public journey (besides to Nepal and Bhutan), journey for enterprise or medical remedy, items or donations, upkeep of shut relations overseas, research, and abroad investments. On the opposite hand, prohibited transactions embrace remitting cash for buy of lottery tickets, for margin calls to abroad exchanges / counterparties, and for buy of belongings in international locations recognized as non-cooperative by the Financial Action Task Force.
“Certain transactions are prohibited below regulation, and the identical restrictions have been integrated even below the LRS,” says Neeraj Agarwala, partner, Nangia Andersen India.
To be able to remit money, the individual must have a valid PAN and should be able to provide adequate documents to prove the genuineness of the transaction, says Agarwala.
As for investments made abroad, he says, “Investing in the shares of a private company is permitted under the LRS. But one needs to ensure that they comply with the ODI (overseas direct investment) guidelines. So, the monetary limit comes from the LRS, and the compliances and other regulations come in from the ODI scheme.”
While the LRS restrict applies at a person degree, relations can membership collectively their permissible limits. Agarwala says RBI has now particularly permitted pooling of funds for the acquisition of immovable property exterior India. “So, if I buy a property for $4,00,000, then I can remit $2,50,000 and the stability could be remitted by my spouse. After the latest modification, she needn’t be a co-owner within the property.”
RBI information on LRS exhibits ‘maintenance of relatives’ and ‘gifts’ among the many prime spend classes after journey and research overseas.
According to Agarwala, for the aim of LRS, the identical definition of relative as below the Companies Act, 2013, is relevant. This contains father, mom, partner, siblings, and many others. “In absence of any particular directions on what is roofed below ‘maintenance’, this could usually imply the price of lodging, journey, medical and training bills of shut relations.”
Again, ‘gift’ has not been defined. “So, any money transferred out of love and affection, and not as consideration for any services received would qualify as a gift,” provides Agarwala.
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