Law stated in this book is as amended upto 28th June, 2026
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12 LIBERALISEDREMITTANCE SCHEME(LRS)
12.1 Background
Limit of USD 2,50,000 per financial year for current account transactions for individuals and others
Tax Collection at Source @ 20% on LRS remittance and sale of overseas tour package -
Payments through International Credit Cards are not included in LRS limit and TCS will not apply
12.1-1 Remittances to International Financial Services Centres (IFSCs) under LRS and opening FCA in IFSC
12.2 Liberalised Remittance Scheme (LRS) of USD 2,50,000 for resident individuals
Scheme available to minors also
Consolidation of remittance of family members
Transactions not permissible under LRS
12.2-1 Capital Account transactions permissible under LRS
bona fide
Banks should not finance to facilitate capital account remittances
12.2-2 LRS for current account transactions-
Private visits abroad -
Tour related expenses -
Gift/donation to person resident out of India -
Going abroad on employment -
Emigration -
Maintenance of close relatives abroad
Business trips abroad -
LRS not permissible if employee deputed out of India bona
fides
Medical treatment abroad
Facilities available to students for pursuing their studies abroad-
Payment for Courses in Financial Management, Engineering etc. by foreign universities or institutions in IFSC -
12.2-3 Other remittance and expenses permissible under LRS
Purchase of objects or art -
Remittances by DD for permissible transactions -
Opening and maintaining foreign currency account for LRS expenses -
Remittances to International Financial Services Centres (IFSCs) under LRS and opening FCA in IFSC -
Remittance for payment of fees under LRS from IFSC
12.2-4 Prohibited transactions under LRS
Purposes prohibited under Current Account transaction rules
Capital account remittances to FATF countries
12.2-5 Tax Collection at Source (TCS) on remittances under LRS and Overseas Tour Programme Packages [OTPP]
Rate of TCS under Section 206C(1G) of Income-tax Act -
Type of remittance
TCS Rate Upto 1-10-2023
New TCS Rate (effective from 1-10-2023) [If remitter has PAN and files Income Tax Returns]
Amount paid abroad through International Credit Cards will not be considered as remittance under LRS and no TCS-
Limit of Rs. seven lakhs is for entire financial year and for all transactions together
No separate LRS limit for each type of transaction
When should tax be collected under Section 206C(1G) of Income-tax Act –
v
TCS rate if the remitter does not furnish his PAN or is a non-filer of income-tax return - -
TCS applies even when LRS remittance is made to Bank or FI in International Financial Services Centre (IFSC) a
Nature of remittance
New provision PAN/ Aadhaar furnished PAN/ Aadhaar not furnished If collectee has not furnished return of income
Threshold of Rs. 7 lakhs applies to all remittances made through different authorised dealers or different OTPP together and hence declaration from remitter required
Provisions of TCS on LRS and TCS on OTPP are separate and independent –
Remittance for purchase of package tour will be considered as OTPP even if amount is remitted under LRS -
Scope of remittance under LRS for medical treatment purposes -
TCS provision for purpose of medical treatment would apply when remittance is under code S0304 or under code S1108.
Remittance for medical-related expenses on estimate basis -
Scope of remittance under LRS for education purposesi ii
TCS provision for purpose of education would apply when remittance is under code S0305 or under S1107.
Mere international travel ticket or booking of hotel accommodation abroad is not OTPP
12.3 Documentation by the remitter for availment of LRS
Funds can be retained and invest abroad
Investor can retain and reinvest income under LRS -
12.4 Facility to grant loan in rupees to NRI/OCI close relative under the Scheme
12.4-1 Rupee Gift to NRI/OCI who is relative of remitter
12.5 Operational instructions to Authorised Persons
No document specified by RBI
AD Bank can prescribe documents to be obtained by branches
AD Bank to keep records and report suspicious transactions to RBI
AD Bank to ensure compliance of income tax TDS provisions
AD Bank to follow KYC norms and Anti-Money Laundering Rules -
FEMA & FDI READY RECKONER
AUTHOR : Taxmann's Editorial Board
PUBLISHER : Taxmann
DATE OF PUBLICATION : July 2026
EDITION : 25th Edition | July 2026
ISBN NO : 9788167010148
NO. OF PAGES : 616
BINDING TYPE : Paperback
Rs. 1,795
DESCRIPTION
FEMA & FDI Ready Reckoner is a topic-wise treatise that consolidates India's foreign exchange and foreign investment law into a single quick-reference volume of 55 chapters (plus a supplementary Chapter 14A) and a Subject Index. Subject by subject, it brings together the Foreign Exchange Management Act 1999 (FEMA) and its rules and regulations, the RBI's Master Directions and A.P. (DIR Series) circulars, the Non-Debt Instruments and Overseas Investment Rules/Regulations, the consolidated FDI Policy, and the relevant case law—so the statutory provision, the regulator's instructions, and the judicial position on any topic sit in one place.
True to its name, every subject is a self-contained chapter with granular decimal paragraph numbering, letting a professional pinpoint and act on a precise point without wading through the bare Act—in plain, application-oriented language anchored to the governing sections, rules, Master Directions, and circulars. This Edition states the law as on 28th June 2026, incorporating the newly notified Foreign Exchange Management (Authorised Persons) Regulations 2026, the latest FDI policy, and RBI changes. Twenty-five editions of continuous revision make it one of the field's most trusted desk references.
The book is written for anyone who has to understand, apply, or advise on cross-border transactions under Indian law, including:
•Chartered Accountants, Company Secretaries, Cost Accountants, and Lawyers
•Authorised Dealer (AD) Banks, Forex Desks, and Treasury/Trade-Finance Teams
•CFOs, Finance Controllers, and In-house Legal/Compliance Teams
•Foreign Investors, FPIs, FVCIs, Private Equity/Venture-Capital Funds, and MNCs
•Indian Entities Making Overseas Direct Investment (ODI)
•NRIs and OCIs
•Startups Raising Foreign Capital
•Compliance and Reporting Officers
•Students, Academicians, and Professional-exam Candidates
The Present Publication is the 25th Edition | July 2026, amended up to 28th June 2026. This book is authored by Taxmann's Editorial Board with the following noteworthy features:
•[Consolidated, Single-source Treatment] Each topic combines the statute, the rules and regulations, the RBI Master Directions and A.P. (DIR Series) circulars, the FDI policy, and the case law—sparing the reader from cross-referencing multiple sources
•[True Ready-reckoner Format] Self-contained chapters (numbered 1–55, plus a Chapter 14A) with granular decimal paragraph numbering make it fast to locate and resolve a specific FEMA/FDI question
•[Fully Updated] Incorporates the Foreign Exchange Management (Authorised Persons) Regulations 2026, the current FDI policy, and the latest RBI notifications
•[Heavily Practical Apparatus] Rich in step-by-step procedures, reporting forms and returns, formats, annexures, and worked examples—with several hundred pointers to RBI Master Directions and circulars
•['At a Glance' Sector Tables] Sector-wise FDI limits, entry routes, and conditions, mapped to the Non-Debt Instruments Rules schedules and the FDI-policy paragraphs
•[Case Law Integrated Topic-wise] Supreme Court, High Court, and Tribunal decisions (with citations) beside the provisions they interpret—notably on export realisation, offences, penalties, and compounding
•[Allied Laws in One Volume] Goes beyond FEMA to cover PMLA, FCRA, and COFEPOSA, plus the IFSC regime
•[Anchored to the Source] Section, rule, regulation, Master Direction, and circular references throughout, plus a detailed Subject Index for pin-point navigation
