LRS Scheme Meaning: Liberalised Remittance Scheme Explained
LRS stands for Liberalised Remittance Scheme, and is an important concept to understand if you’re sending money from India, or if you’re an NRI (Non-resident Indian) or PIO (Person of Indian Origin) with a bank account in India.
Under the LRS, the Reserve Bank of India applies limits on the value and types of payments which can be sent from India, and from some non-resident Indian accounts, overseas.
Understanding LRS is crucial for compliant and cost-effective remittances from INR. This guide covers the basics, plus we’ll introduce international money transfer providers like Wise and OFX as a smart solution if you’re sending money to India.
Send money internationally with Wise:
- Send money to 140+ countries
- Discounts for £20,000+ (or equivalent)
- Transfer at the real exchange rate
*Withdraw up to 350 AUD from ATMs for free with 2 or less withdrawals
What is the Liberalised Remittance Scheme (LRS)?
Let’s start with the LRS meaning and a bit of history. The LRS is overseen by the Reserve Bank of India (RBI) and falls under the Foreign Exchange Management Act (FEMA). The LRS was brought in in 2004, to help manage and facilitate outgoing payments from India heading overseas.
The LRS allows Indian residents to send money abroad for various purposes, and sets limits which apply on annual total payments per person. If you need to send more than the LRS limit you may still be able to do so but you’ll need additional permissions. Tax is also likely to apply. This helps the RBI maintain oversight of payments and prevent fraud and illegal financial activities.
Under the LRS, all resident individuals, including minors, are allowed to remit up to 250,000 USD or the currency equivalent annually from India to another country, for permissible reasons. This allows Indian residents to send money abroad to cover their travel costs, or to fund an overseas education or medical treatment for example.
This guide walks through how the LRS works and what it might mean for you if you send money to or from India.
The Liberalised Remittance Scheme (LRS) is governed by law, and penalties may apply if you do not follow the rules and limits involved. This guide is for information only and should not be taken as advice – if you’re ever unsure about your duties or options for a payment, get professional support from an accountant or lawyer.
📲 Learn more about international money transfers
What Does LRS Mean for Money Transfers?
LRS transactions can include payments made from any bank account by a resident Indian. This means you’ll need to understand the rules if you’re an Indian resident and want to send funds overseas.
There are also some implications of LRS for sending money from India if you’re a non resident Indian – an NRI or PIO for example – and hold a bank account in India. We’ll examine the practical details you’ll want to know about in just a moment.
What is the Limit of Remittance Under LRS?
The current LRS limit is 250,000 USD or the equivalent in other currencies per financial year. The financial year runs April to March annually. All Indian residents, including children, can remit up to this amount.
There’s not an RBI limit on the number of transactions you make when moving money out of India, only on the total amount. However, banks and money transfer services usually set their own limits which can be significantly smaller than the limit applied by the RBI.
It’s also important to note that money can also only be remitted for some, pre-set, specific purposes – and you’ll have to confirm the reason for your transfer when you arrange it. More on that next.
Send money internationally with Wise:
- Send money to 140+ countries
- Discounts for £20,000+ (or equivalent)
- Transfer at the real exchange rate
*Withdraw up to 350 AUD from ATMs for free with 2 or less withdrawals
What Remittance Purposes Are Allowed?
The RBI lists the remittance purposes which are allowed under the LRS as follows:
- Private visits to any country other than Nepal and Bhutan
- Sending a gift or donation
- Going abroad for employment or to emigrate
- Remittance payments for daily expenses, to close relatives abroad
- Travel for business, training or for meetings
- Paying medical expenses, or accompanying as attendant to a patient going abroad for medical treatment
- Studies abroad
What Remittance Purposes Are Prohibited?
Money which originated from specific sources can not be remitted out of India under the terms of the LRS – this includes:
- Lottery winnings
- Profit from gambling
- Payments intended for the purchase of lottery tickets
- Payments involving banned / proscribed magazines
- Money from or for football pools and sweepstakes
Aside from this there are other prohibited payment types, such as transfers for margins or margin calls to overseas exchanges, or for trading in foreign exchange abroad. If you’re unsure about whether your reason is permissible you’ll need to seek advice from a professional.
If you need to transfer more than the LRS limit you may still be able to do so, but you will need to get advance permission from the RBI. You are also likely to be liable for TCS – tax collected at source – which is held by the bank or provider which processes the payment. Slightly different rules can apply here depending on the reason for the payment, and your status – as an individual or business owner for example – so getting advice is essential to make sure you understand your obligations.
📲 You may also like: Tax implications of receiving money from overseas
LRS forms
When you send money from India under LRS, transfers need to be done by an authorised dealer. As the sender you will have to fill out some information about the transfer, like who you are sending money to, and why, so the dealer can check and confirm that the payment is eligible for an LRS transfer.
LRS scheme for non residents of India
LRS does not apply to non-residents of India. However, there are still some rules which apply if you want to remit funds from India using your non-resident account.
Non-residents can transfer funds from NRO, NRE and FCNR accounts, but there may be limits which apply:
Non-Resident External (NRE) Account – No LRS limit
Non-Resident Ordinary (NRO) Account – 1 million USD annual limit under LRS
Foreign Currency Non-Resident (FCNR) Account – No LRS limit
What is the Penalty for LRS Violations?
Complying with the law when sending money to and from India is important – the penalties for violating LRS regulations can include fines and other consequences.
The specific penalties which may apply depend on the nature of the violation, how long it has been going on for, the value and other factors. You may find you have to pay a fine which can be a percentage value of the amount involved or a per violation penalty for example.
The safest way to avoid issues is to ensure you only use authorised dealers when sending money from India abroad, and by getting professional advice when you need it to make sure your payments remain compliant.
Best Ways to Send Money Overseas
When you’re sending a payment overseas, a bank may be the obvious place to look – but international money transfer providers can often offer lower service fees compared to banks, and better exchange rates.
It’s important to look at the exchange rate that’s used to convert your dollars to rupees, as there are often fees here, even if they’re not obvious. The mid-market rate is a good benchmark as it’s the rate you see on Google and the one banks get when buying currency themselves. Compare the rate you’re quoted against the mid-market rate – or choose a provider which uses the mid-market rate automatically and splits out the fees clearly – so you can see the total costs.
To illustrate, lets compare some international money transfer providers against a popular Australian bank for sending money from AUD to INR:
|
Sending 10,000 AUD to INR |
|||
|---|---|---|---|
|
Providers |
Exchange rate |
International transfer fees |
Money received in INR |
|
Wise |
56.1435 (mid-market rate) |
55.15 AUD |
558,338.69 INR |
|
OFX |
54.6287 |
0 AUD |
546,286.56 INR |
|
ANZ |
54.1177 |
0 AUD |
541,177.11 INR |
*Details correct at time of research – 17th June 2025. Information from the Wise comparison page
As you can see, all of the specialist services we’ve looked at for this example transfer offer a better exchange rate compared to ANZ, which means your recipient gets more in the end with a specialist alternative. Alternative providers offer flexible ways to send money overseas, and it’s helpful to compare a few before you send your transfer – as well as costs, look at other factors like delivery times and limits, as well as payment methods, to decide what option suits you best. We’ve got a bit more details about each of these provider options coming right up.
Wise
🏅 Great for: Fast and convenient international transfers at the mid-market rate with no hidden fees
Wise international transfers are arranged online or in app, with 80%+ of transfers arriving within an hour*. You’ll be able to pay using popular methods like bank transfer, debit/credit card, PayID and RTGS, to have the money deposited to a bank account in India conveniently. Currency conversion uses the mid-market rate with no fees added. Instead, the costs are all split out so you can easily see them – fees vary, and start from 0.65% of the payment value. If you’re sending high value payments, you may even benefit from automatic fee discounts which you’ll see when you set up your transfer.
Need more? Wise customers can send money to over 140 countries, and can also open accounts to hold, receive and spend foreign currencies conveniently.
- Sending limits to INR: If you’re sending as an individual, to another individual you can send up to 100 million INR per transfer – to an IMPS recipient, you can send up to 500,000 INR instantly, or to a UPI recipient, you can send up to 200,000 INR instantly.
- Speed: 60%+ of transfers are instant, 80%+ arrive within an hour*
- Sending fees: Variable fees from 0.65%
*The speed of transaction claims depends on individual circumstances and may not be available for all transactions
OFX
🏅 Great for: International payments which have competitive exchange rates, 24/7 support, and no transfer fees for large transactions
With OFX you can transfer money internationally with no transfer fees on high value payments over 10,000 AUD. Exchange rates do include a small markup, which you’ll be able to check and compare when you set up your payment. OFX is well known for having excellent customer service with support available by phone 24/7 so you can get assistance anytime for transfer-related inquiries.
- Sending limits to INR: There may be no OFX limit, but you’ll need to talk to an OFX broker to check the details on your specific payment
- Speed: Payments arrive in 1 – 2 days usually
- Sending fees: 15 AUD fee for payments under 10,000 AUD, waived above that
ANZ
🏅 Great for: Phone and digital transfers from Australia to India which waive the correspondent bank fees
ANZ has no fee for high value phone and digital payments to India over 10,000 AUD, although there’s a 9 AUD fee if you’re sending under 10,000 AUD. The exchange rate used to convert your payment will include a markup – which is a fee, and which can push up the overall costs as we saw in the payment example earlier.
- Sending limits to INR: 1,000 AUD is the standard digital limit, which you can raise to 25,000 AUD using ANZ Shield. No ANZ limits on phone payments
- Speed: Delivery times depend on bank processes including the processes in the recipient’s own bank
- Sending fees: For payments arranged online or by phone under 10,000 there’s a 9 AUD fee, waived beyond that
Conclusion
If you’re expecting a payment from India to Australia, or if you’re a non-resident Indian or anyone else sending payments to and from INR, it’s helpful to understand the implications of the LRS on cross border payments. This guide covers the basics of what you can send, and why – but you may also find you need professional advice which can be tailored to your specific needs.
No matter where you’re sending money to or from, Wise can help with low cost international transfers that use the mid-market rate, and need nothing more than your phone or laptop.
Liberalised Remittance Scheme – FAQ
What is the purpose of the Liberalised Remittance Scheme?
The Liberalised Remittance Scheme helps to facilitate and manage payments from India in INR which are being sent to other countries and currencies. There are certain limits and permissible reasons under the LRS scheme, which helps to prevent fraud and illegal activities for example.
What documents are required for LRS transactions?
If you’re sending an LRS payment from India you must work with an authorised bank or dealer to process your payment. They will provide you with the documents needed to confirm the important details of your payment and to ensure it is compliant.
Can LRS be used for cryptocurrency investments?
Get professional advice if you want to use LRS for risky transactions like cryptocurrency investments. This is not likely to be allowed, but taking tailored advice can help you navigate your options.
Are there any tax implications for LRS transfers?
Some taxes may be applied on LRS transfers if you exceed the maximum limits which are set for exemptions to tax. Tax rates vary depending on the reason for the payment. Your bank or authorised dealer can advise you on tax matters – this guide is not suited to individual advice and should be used for information only.
