LRS Scheme Explained: Investing $250,000 Abroad
Everything you need to know about the Liberalised Remittance Scheme: limits, TCS, purpose codes, costs, and the step-by-step process.
The Liberalised Remittance Scheme is the regulatory backbone of global investing from India. Every rupee that moves from your Indian bank account to a foreign brokerage, a GIFT City platform, or an overseas mutual fund goes through LRS. And yet, most Indian investors have never used it.
This guide strips all of that away. By the end, you will know exactly how LRS works, what it costs, how to use it, and why the TCS you pay is not actually a cost at all.
$250,000 Per Year for Every Indian
LRS is a regulatory framework introduced by the RBI in 2004 that permits every resident Indian to remit up to $250,000 per financial year for permissible current and capital account transactions. When launched, the limit was $25,000. It has been progressively increased to reflect India's growing integration with global markets.
Every resident Indian individual, including minors through a guardian, can use LRS. No minimum income. No special approval. Just a PAN card and a bank account with an Authorised Dealer bank. LRS is not available to NRIs, corporations, partnership firms, HUFs, or trusts.
What You Can Use LRS For
The $250,000 limit is cumulative across all purposes in a financial year. If you have used $50,000 for education and $20,000 for travel, you have $180,000 remaining for investments.
TCS Is Not an Additional Tax
TCS (Tax Collected at Source) is an advance tax payment your bank collects at remittance and deposits with the government. It is fully adjustable against your income tax liability when you file your ITR. You either pay less tax later or get the excess refunded.
"LRS gives every Indian resident the right to invest $250,000 abroad each year. Most people do not use a single dollar of it."
Step by Step Investment Remittance
Choose your destination platform
Decide where the funds are going: a GIFT City broker-dealer like Valura, a US brokerage, or any other overseas investment platform. The platform provides beneficiary bank details you will need.
Initiate the remittance at your bank
Log into net banking or visit a branch. Navigate to Outward Remittance. Fill Form A2 (declaration). Enter purpose code S0001 for equity investment. Provide beneficiary details (account number, SWIFT code).
Bank processes and collects TCS
Your bank checks year-to-date LRS remittances across all banks. If above ₹10 lakh, TCS is collected at 20% on the excess. Bank converts INR to USD and initiates wire transfer.
Funds arrive in foreign account
Typically 1-3 business days for SWIFT transfers. Some platforms offer faster processing through integrated banking partnerships. Once funds arrive, you can begin investing.
Retain documentation
Keep Form A2 acknowledgement, bank remittance confirmation (showing INR amount, exchange rate, USD amount, TCS deducted), SWIFT reference number, and purpose code used.
The Real Cost Breakdown
Pro tip: Compare total costs (spread + fee) across banks before remitting. HDFC, ICICI, and SBI all process LRS routinely. For large amounts, call the forex desk and negotiate the spread. Batch your remittances to minimise per-transfer fees.
Common Mistakes to Avoid
Using the wrong purpose code
Classifying investment as 'travel' to reduce TCS is a FEMA violation. Banks cross-check. Always use the correct code.
Not tracking cumulative remittances
The ₹10 lakh threshold is PAN-based and cumulative across all banks and purposes for the financial year. Track it yourself.
Assuming TCS is a cost
TCS is an advance tax payment, fully adjustable against your income tax liability. You get it back as a credit or refund.
Not disclosing foreign assets
Every asset acquired through LRS must be disclosed in Schedule FA. Penalties under the Black Money Act can reach ₹10 lakh per year.
Waiting for a better exchange rate
The rupee has depreciated in 28 of the last 32 years. Invest systematically instead of timing currency.
LRS Questions
Your $250,000 right. Simplified.
Valura is an IFSCA-registered broker-dealer that handles LRS compliance seamlessly. Invest in global equities, ETFs, bonds, mutual funds, REITs, and pre-IPO opportunities. Start from as little as ₹500.