Education
INVEST GLOBALLY THROUGH PERMITTED ROUTES
An educational overview of how eligible Indian residents may access overseas investments under the Liberalised Remittance Scheme. This is not tax, legal or investment advice.
Information on this page is current as of 18 September 2026 and covers financial year 2026-27. Rules, limits, tax treatment and regulatory requirements may change. Investors should verify current requirements with applicable authorities and qualified professional advisers.
What is the LRS?
The Liberalised Remittance Scheme is a Reserve Bank of India framework, introduced in 2004 and operating under FEMA, 1999. It allows resident individuals — including minors, acting through a guardian — to remit funds abroad for permitted current and capital account transactions through an authorised dealer bank.
- Annual limit: up to USD 250,000 per individual per financial year (April–March).
- The limit is per person, so family members with their own PAN each have a separate limit.
- Permitted purposes include education, medical treatment, travel, gifts to relatives, and investment in overseas securities and property.
- Remittances for lottery, margin trading, and purchases from FATF non-cooperative jurisdictions are not permitted; crypto-asset purchases are not a recognised LRS purpose.
Who is eligible
Eligibility is decided by your authorised dealer bank based on residency and documentation. LRS is available only to resident individuals.
- You must be a resident individual as defined under FEMA, 1999.
- A PAN is mandatory for LRS remittances, and an inoperative PAN can attract a higher TCS rate.
- Corporates, partnership firms, trusts, HUFs and non-residents cannot remit under LRS.
- Your bank relationship, KYC status and source-of-funds evidence must satisfy the bank's checks.
- Individuals with adverse regulatory records or incomplete documentation may be declined.
How overseas investing works
Funds move from your Indian bank account to an overseas account in the destination currency, and are then used to buy permitted securities through the relevant regulated intermediaries.
- Complete account opening and KYC with the overseas intermediary.
- Submit Form A2 and the LRS declaration to your authorised dealer bank.
- The bank converts INR to the destination currency at its applicable rate and charges its fees.
- Funds settle in the overseas account, usually within one to three business days.
- Securities are purchased and held according to the overseas intermediary's custody arrangements.
Tax collected at source (TCS)
Banks collect TCS on outward LRS remittances at the time of the transfer. The threshold is ₹10 lakh per financial year, aggregated across all purposes, all banks and all modes of payment against the same PAN — TCS applies only to the amount above that threshold. Rates shown are for FY 2026-27 and were current as of 18 September 2026.
- Investment and all other LRS purposes: 20% on the amount above ₹10 lakh in a financial year.
- Education (self-funded) or medical treatment: 2% on the amount above ₹10 lakh.
- Education funded by a loan from a specified institution: nil.
- Overseas tour packages: 2%, with no threshold.
- An inoperative PAN can attract a higher rate on some categories.
- TCS is not an additional tax — it is credited against your income tax liability and can be claimed in your return or adjusted against advance tax; a lower-collection certificate may be applied for.
Other tax considerations
Holding and selling overseas securities creates its own Indian tax obligations, separate from TCS.
- Dividends from US stocks are generally subject to US withholding tax; relief may be available under the India–US tax treaty and through foreign tax credit.
- Capital gains on overseas securities are taxable in India according to the holding period and prevailing rules.
- Foreign assets and foreign income must be reported in the Schedule FA / FSI sections of your income tax return; non-disclosure carries penalties.
- Rates, holding-period rules and reporting formats change periodically — confirm the current position with a qualified tax adviser.
FEMA considerations
LRS itself is governed by FEMA and RBI rather than tax law, and those rules remain separate from the tax layer.
- Remittances must be for a permitted purpose and correctly coded by the bank; an incorrect purpose code can cause an incorrect TCS charge.
- Overseas Portfolio Investment by resident individuals is permitted within the LRS limit, subject to the OI Rules and Regulations, 2022.
- Unused funds abroad are generally required to be repatriated within the prescribed period unless reinvested for a permitted purpose.
- Breaches of FEMA can attract compounding proceedings and penalties.
Documentation
Requirements vary by bank and by overseas intermediary, but generally include:
- PAN card and proof of identity and address.
- Form A2 and the LRS declaration confirming cumulative remittances in the financial year.
- Bank account statements and source-of-funds evidence.
- Overseas account details and any account-opening documents such as W-8BEN for US brokerage accounts.
Risks to weigh
Overseas investing carries risks that are additional to those of domestic investing.
- Market risk, including possible loss of principal.
- Currency risk — rupee movement can change returns independently of the security's price.
- Country, regulatory and policy risk, including changes to remittance limits and tax treatment.
- Liquidity, trading-hour and settlement differences across markets.
- Costs: conversion spreads, bank charges, custody and intermediary fees.
INRGIFT does not provide tax, legal or investment advice, and does not guarantee investment returns. Verify current limits, rates and reporting requirements with your authorised dealer bank and a qualified professional adviser before remitting funds.