LRS Scheme – An Indian resident individual is permitted to remit upto USD 250,000 per financial year for any permitted current or capital account transaction or a combination of both*.
The permissible capital account transactions by an individual under LRS are:
- Opening of foreign currency account abroad with a bank
- Purchase of property abroad
- Making investments abroad- acquisition and holding shares of both listed and unlisted overseas company or debt instruments; acquisition of qualification shares of an overseas company for holding the post of Director; acquisition of shares of a foreign company towards professional services rendered or in lieu of Director’s remuneration; investment in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes;
- Setting up Wholly Owned Subsidiaries and Joint Ventures (effective from August OS, 2013) outside India for bonafide business subject to the terms & conditions stipulated in Notification No FEMA.263/ RB-2013 dated March 5, 2013;
- Extending loans including loans in Indian Rupees to Non-resident Indians (NRls) who are relatives as defined in Companies Act, 2013.
Furthermore, an investor who has remitted funds under LRS can retain and reinvest the income earned on the investments. Presently the resident individual is not required to repatriate the funds or income generated out of investments made under the LRS Scheme.
Some useful links –
https://www.rbi.org.in/scripts/BS_ViewMasterDirections.aspx?id=10192#1
https://m.rbi.org.in/Scripts/FAQView.aspx?Id=115
*The information above is updated as of 31 March, 2020. Source – RBI