What is the Liberalised Remittance Scheme and how much money can I remit abroad?

Question

I want to send money abroad for my child's education and want to know the annual limit and rules under RBI's Liberalised Remittance Scheme. I would rather settle this without going to court if the law allows it, but I need to know my rights before I sign anything. Please tell me what to do first and what document to keep.

MyVakeel Legal Desk · Accepted Answer

Under Indian law, Foreign Exchange Management Act 1999, Section 5 is the starting point for this banking law question. What follows is the position in substance, together with the steps that usually make the difference in practice.

Section 5 of the Foreign Exchange Management Act 1999 permits current account transactions such as remittances, subject to reasonable restrictions the Central Government may impose in consultation with the RBI, which is why the Liberalised Remittance Scheme sets an annual cap.

Under the RBI Master Direction on the Liberalised Remittance Scheme, a resident individual can remit up to USD 250,000 per financial year for permitted current and capital account transactions, including education, medical treatment, travel, investment in shares or property abroad, and maintenance of relatives.

The FEMA (Current Account Transactions) Rules 2000 list certain transactions that are entirely prohibited, such as remittance for lottery winnings or purchase of foreign lottery tickets, and others requiring prior RBI approval beyond the LRS limit.

Remittances under the LRS require the remitting bank to obtain a Form A2 declaration and, where applicable, a PAN, and the bank is responsible for ensuring the remittance falls within permissible purposes and the annual limit is not breached across all authorised dealer banks.

Exceeding the LRS limit without RBI's specific permission, or using it for a prohibited purpose, is treated as a contravention of FEMA and can attract penalty proceedings under the Foreign Exchange Management Act before the Enforcement Directorate's adjudicating authority.

What to do next: 1) Confirm the purpose of remittance falls within the permitted list under the LRS before initiating it; 2) Track your cumulative remittances across all banks to ensure you remain within the USD 250,000 annual cap; 3) Submit Form A2, PAN and supporting documents such as the education offer letter or medical estimate to your bank; 4) Seek RBI's specific approval through your bank if you need to remit beyond the LRS limit for a genuine purpose.

If you are unsure whether your facts fall inside Foreign Exchange Management Act 1999, Section 5, that is worth checking with an advocate before you commit to a route, because switching later costs time. You can post the details on the MyVakeel forum for a practising advocate to review, or book a paid consultation with a Bar Council verified lawyer in banking law.