Law stated in this book is as amended upto 25th November, 2025
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SAMPLE CHAPTER
12
LIBERALISED REMITTANCE SCHEME (LRS)
12.1 Background vide -
Limit of USD 2,50,000 per financial year for current account transactions for individuals and others ix
Tax Collection at Source @ 20% on LRS remittance and sale of overseas tour package`
Payments through International Credit Cards are not included in LRS limit and TCS will not apply
See
12.1-1 Remittances to International Financial Services Centres (IFSCs) under LRS and opening FCA in IFSC
12.2 Liberalised Remittance Scheme (LRS) of USD 2,50,000 for resident individuals
Scheme available to minors also -
Consolidation of remittance of family members
Transactions not permissible under LRS
12.2-1 Capital Account transactions permissible under LRS
Banks should not finance to facilitate capital account remittances
12.2-2 LRS for current account transactions-
Private visits abroad -
Tour related expenses -
Gift/donation to person resident out of India -
Going abroad on employmentEmigration -
Maintenance of close relatives abroad
Business trips abroad -
LRS not permissible if employee deputed out of India bona
fides
Medical treatment abroad
Facilities available to students for pursuing their studies abroad-
Payment for Courses in Financial Management, Engineering etc. by foreign universities or institutions in IFSC -
12.2-3 Other remittance and expenses permissible under LRS
Purchase of objects or art -
Remittances by DD for permissible transactions
Opening and maintaining foreign currency account for LRS expenses
Remittances to International Financial Services Centres (IFSCs) under LRS and opening FCA in IFSC -
Remittance for payment of fees under LRS from IFSC
12.2-4 Prohibited transactions under LRS
Purposes prohibited under Current Account transaction rules
Capital account remittances to FATF countries Para 12.2
91
12.2-5 Tax Collection at Source (TCS) on remittances under LRS and Overseas Tour Programme Packages [OTPP]
Rate of TCS under Section 206C(1G) of Income-tax Act -
Type of remittance
TCS Rate Upto 1-10-2023
New TCS Rate (effective from 1-10-2023) [If remitter has PAN and files Income Tax Returns]
Amount paid abroad through International Credit Cards will not be considered as remittance under LRS and no TCS-
Limit of Rs. seven lakhs is for entire financial year and for all transactions together -
No separate LRS limit for each type of transaction
Para 12.2
When should tax be collected under Section 206C(1G) of Income-tax Act –
TCS rate if the remitter does not furnish his PAN or is a non-filer of income-tax return -b
TCS applies even when LRS remittance is made to Bank or FI in International Financial Services Centre (IFSC) a
Nature of remittance
New provision
PAN/ Aadhaar furnished PAN/ Aadhaar not furnished If collectee has not furnished return of income
Threshold of Rs. 7 lakhs applies to all remittances made through different authorised dealers or different OTPP together and hence declaration from remitter required
Provisions of TCS on LRS and TCS on OTPP are separate and independent –
Remittance for purchase of package tour will be considered as OTPP even if amount is remitted under LRS -
Scope of remittance under LRS for medical treatment purposes - -
TCS provision for purpose of medical treatment would apply when remittance is under code S0304 or under code S1108.
Remittance for medical-related expenses on estimate basis -
qua qua
Scope of remittance under LRS for education purposesi iiiii
TCS provision for purpose of education would apply when remittance is under code S0305 or under S1107.
Mere international travel ticket or booking of hotel accommodation abroad is not OTPP i
12.3 Documentation by the remitter for availment of LRS
Investor can retain and reinvest income under LRS -
12.4 Facility to grant loan in rupees to NRI/OCI close relative under the Scheme
12.4-1 Rupee Gift to NRI/OCI who is relative of remitter
12.5 Operational instructions to Authorised Persons
No document specified by RBI -
AD Bank can prescribe documents to be obtained by branches
AD Bank to keep records and report suspicious transactions to RBI -
AD Bank to ensure compliance of income tax TDS provisions
AD Bank to follow KYC norms and Anti-Money Laundering Rules -
FEMA & FDI READY RECKONER
AUTHOR : Taxmann's Editorial Board
PUBLISHER : Taxmann
DATE OF PUBLICATION : December 2025
EDITION : 24th Edition | 2026
ISBN NO : 9789371269865
NO. OF PAGES : 596
BINDING TYPE : Paperback
Rs. 1,695
DESCRIPTION
FEMA & FDI Ready Reckoner is a comprehensive, practice-oriented reference that consolidates and operationalises India's foreign exchange management and foreign investment framework. Conceived as a ready reckoner, the book integrates the Foreign Exchange Management Act 1999 (FEMA), the FDI Policy framework, and the extensive body of RBI rules, regulations, Master Directions, A.P. (DIR) circulars, and procedural instructions governing cross-border transactions in India.
Recognising that FEMA compliance spans multiple legal and regulatory instruments, the book addresses the fragmented regulatory landscape by bringing together substantive permissions, conditions, and procedures into a single, transaction-ready framework. It enables readers to assess permissibility, comply with conditions, execute transactions, complete statutory reporting, and manage regulatory exposure with clarity and precision.
This Edition incorporates all amendments, regulatory changes, circulars, and policy updates as amended up to date, capturing recent developments in FDI liberalisation, overseas investment reforms, ECB and trade credit norms, digital compliance platforms, INR-based international trade settlement, enforcement mechanisms, and compounding procedures.
This Ready Reckoner is indispensable for professionals and institutions that deal with foreign exchange and cross-border transactions on a regular basis, including:
• Chartered Accountants, Company Secretaries & Cost Accountants
• Regulators, Government Officers & Enforcement Authorities
• Academics & Advanced Students
The Present Publication is the 24th Edition | 2026, amended up to 25th November 2025. This book is authored by Taxmann's Editorial Board with the following noteworthy features:
• [End-to-End FEMA Coverage] From foundational concepts to complex capital account transactions
• [Integrated FDI Framework] Consolidated treatment of policy, sectoral caps, entry routes, and conditions
• [Strong Compliance & Reporting Orientation] Clear linkage between substantive law and filing obligations
• [Digital-dra Compliance Focus] Coverage of RBI platforms such as CIMS, FIRMS/Single Master Form (SMF), FETERS, and APConnect
• [Late Filing & Regularisation Guidance] Detailed treatment of Late Submission Fees (LSF) across ODI, FDI, ECB, and other regimes
• [Sector-wise FDI Policy at a Glance] Structured and easy-to-navigate sectoral summaries
• [Contemporary Transaction Rails] INR-based trade settlement, Special Rupee Vostro Accounts, and OPGSP frameworks
• [Enforcement & Risk Management] Dedicated coverage of penalties, appeals, and compounding under FEMA
• [Allied Law Integration] Includes PMLA, FCRA, COFEPOSA, and the IFSC framework
• [High Usability] Extensive acronyms list and a detailed subject index
