The Liberalized Remittance Scheme (LRS) is a set of guidelines issued by the Reserve Bank of India (RBI) that allows Indian residents to remit money abroad without any restrictions. However, there are some remittances that are not permissible under the LRS.
Permissible remittances under the LRS:
- Payments for education: This includes tuition fees, hostel fees, books, and other expenses for studies abroad.
- Payments for medical treatment: This includes medical expenses for treatment abroad.
- Payments for travel: This includes expenses for travel abroad, such as airfare, accommodation, and visa fees.
- Payments for maintenance of close relatives: This includes expenses for the maintenance of close relatives who are living abroad.
- Investment in shares and securities: This includes investment in shares, bonds, and other securities of foreign companies.
- Investment in immovable property: This includes investment in immovable property located outside India.
- Remittance for setting up a business abroad: This includes remittance for setting up a business or a branch of a business abroad.
Non-permissible remittances under the LRS:
- Remittances for prohibited purposes: This includes remittances for purposes that are prohibited under the Foreign Exchange Management Act (FEMA), such as gambling, terrorism, and drug trafficking.
- Remittances to countries that are under sanctions: This includes remittances to countries that are under sanctions by the United Nations or the European Union.
- Remittances in excess of the prescribed limits: This includes remittances that exceed the USD 250,000 per financial year limit under the LRS.
It is important to note that the RBI may prohibit or restrict remittances for other purposes as well. It is always advisable to check with the RBI before remitting money abroad.
Here are some MCQs on permissible/non-permissible remittances under the Liberalized Remittance Scheme (LRS):
- What are permissible remittances under the LRS?
- Permissible remittances under the LRS include payments for education, medical treatment, travel, and maintenance of close relatives.
- What are non-permissible remittances under the LRS?
- Non-permissible remittances under the LRS include remittances for prohibited purposes, remittances to countries that are under sanctions, and remittances in excess of the prescribed limits.
- How can I find out if a remittance is permissible under the LRS?
- You can check with the RBI or an authorized dealer (AD) bank.
- What are the penalties for making non-permissible remittances?
- The penalties for making non-permissible remittances can be severe, including imprisonment and fines.
- How can I avoid making non-permissible remittances?
- You can always check with the RBI or an authorized dealer (AD) bank before remitting money abroad.