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 have been reading conflicting things online and I would like to understand what Indian law actually says about this, which Act and Section applies, what the realistic timelines and costs are, and what I should be doing right now to protect my position. If the matter can be resolved without litigation I would prefer that route, but I want to know what my rights are before I agree to anything or sign any document.

MyVakeel Legal Desk · Accepted Answer

What is the Liberalised Remittance Scheme and how much money can I remit abroad? is governed in India primarily by Foreign Exchange Management Act 1999, Section 5, FEMA (Current Account Transactions) Rules 2000 and RBI Master Direction on Liberalised Remittance Scheme. The short answer is set out below, followed by the practical steps most people in this situation need to take. Read it alongside the specific provisions named, because the exact relief available to you turns on the facts you can prove on paper.

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 the other side has already issued a notice, filed a case or set a deadline, treat the matter as time-sensitive — most remedies under Foreign Exchange Management Act 1999, Section 5 carry limitation periods, and a delay you cannot explain weakens an otherwise strong case. 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 this practice area.