You’re planning to send money abroad for your child’s university fees, considering an overseas property investment, or perhaps booking that dream family vacation. Before transferring funds internationally, you need to understand the limit of outward remittance from india and how recent tax changes affect your transfers. The Reserve Bank of India permits resident individuals to remit up to USD 250,000 per financial year under the Liberalised Remittance Scheme (LRS)-.
For 2025, a significant change impacts smaller transfers: the Tax Collected at Source (TCS) exemption threshold has shifted, offering relief for many residents. While individuals navigate these personal remittance rules, businesses operate under different frameworks for their international transactions.
Key takeaways
- What is the LRS Limit? Resident individuals can remit up to USD 250,000 per financial year (April–March) for permissible current and capital account transactions.
- Financial Year Reset: The limit resets annually on April 1st; unused portions cannot be carried forward to the next financial year.
- Eligible Remitters: Only resident individuals (including minors with guardian countersignature) can use LRS; HUFs, firms, companies, and trusts are excluded.
- Business Exemption: Companies and partnership firms operate under different FEMA regulations without the USD 250,000 cap.
- Recent Regulatory Focus: RBI proposed restrictions on using LRS funds for foreign time deposits or lock-in instruments in June 2025.
What is the limit of outward remittance from India?
The standard cap for resident individuals is USD 250,000 per Financial Year (April 1 to March 31) under the Liberalised Remittance Scheme (LRS)-. This scheme, established by the Reserve Bank of India, governs how much money Indian residents can legally send abroad for various purposes.
The LRS functions as a consolidated cap covering all permissible current and capital account transactions combined. Whether you’re paying for education, investing in overseas stocks, gifting money to relatives, or funding travel, all remittances count towards this single annual limit-.
At current exchange rates (using RBI/FBIL reference of ₹83.38), this translates to approximately ₹2,08,45,000 per financial year-. The limit operates on a “use it or lose it” basis: any unused portion expires on March 31st and doesn’t carry forward to the next financial year.
Did You Know?
In the first nine months of FY2024-25 (April–December 2024), Indian residents remitted US$22.82 billion under LRS, with overseas investments and travel forming major components.
How does the LRS limit apply to different users?
Understanding the USD 250,000 annual limit requires knowing who qualifies and how families can optimise their remittances. The Liberalised Remittance Scheme creates distinct rules for individuals versus businesses, with specific provisions for minors and family pooling.
The scheme includes resident individuals and minors while excluding corporates, partnership firms, HUFs, and trusts-. Family members can strategically combine their individual limits for certain capital account transactions, creating opportunities for larger international investments.
Resident Individuals and Minors
Every resident individual, including minors, receives a separate USD 250,000 annual limit under LRS-. For minors, the remittance process requires additional safeguards: the LRS declaration form (Form A2) must be countersigned by the minor’s natural guardian-.
Family Pooling (Clubbing of Limits)
Family members can combine their individual USD 250,000 limits when purchasing immovable property or investment assets abroad-. For instance, a couple could pool their limits to remit up to USD 500,000 for buying overseas property. The critical condition: all remitting family members must become co-owners or co-partners in the overseas asset-.
Explore Razorpay’s Global Payment Solutions
Are there different limits for businesses?
While individuals operate within the USD 250,000 LRS framework, businesses follow entirely different rules for international payments. The distinction between individual and corporate remittance regulations affects how companies manage their cross-border transactions.
Corporate entities, partnership firms, and other non-individual entities cannot use the LRS scheme at all-. Instead, businesses operate under FEMA’s General Permission framework, which provides flexibility for genuine operational needs while maintaining regulatory oversight.
| Aspect | Individual (LRS) | Business (Corporate) |
| Annual Limit | USD 250,000- | No fixed limit for current account |
| Regulatory Framework | Liberalised Remittance Scheme- | General Permission under FEMA |
| Eligible Entities | Resident individuals only- | Companies, firms, partnerships |
| Documentation | Form A2 with PAN- | Invoices, contracts, board resolutions |
Current Account Transactions
Businesses face no predetermined limit for genuine operational expenses under current account transactions. Companies can remit any amount needed for import payments, consultancy fees, royalties, or business travel, provided they maintain proper documentation-.
Supporting invoices, contracts, and clear business justification remain essential for processing these remittances through authorised dealer banks.
Capital Account Transactions
For overseas investments and capital account transactions, businesses follow net worth-linked regulations. Companies making Overseas Direct Investments (ODI) typically operate within limits tied to their financial strength, requiring more detailed RBI reporting compared to individual LRS remittances.
What are the TCS rates and thresholds for 2025?
Moving from remittance limits to tax implications, the Tax Collected at Source (TCS) represents a significant cost factor for anyone sending money abroad. The government’s policy changes for 2025 affect how much tax banks collect when processing your international transfers.
Pro Tip: Plan large remittances around the financial year transition (March-April) to potentially utilise exemption thresholds across two financial years, reducing your immediate TCS burden.
Education (Loan vs. Self-Financed)
The source of education funding dramatically impacts TCS liability:
- Loan-Financed (Section 80E): When education expenses are funded through loans from specified financial institutions, remittances attract reduced TCS rates
- Self-Financed: Personal funds used for education remittances face standard TCS rates on amounts exceeding threshold limits
Medical Treatment
Medical remittances receive special consideration under TCS rules:
- Rate: Specified TCS percentage applies
- Threshold: TCS applies only on aggregate amounts exceeding the annual threshold limit
Overseas Tour Packages
Tour package remittances follow a tiered structure:
- Initial Band: Lower TCS rate on amounts up to the threshold
- Higher Band: Increased TCS rate on amounts exceeding the threshold
- Tour operators must collect TCS at the time of package booking
Other Purposes (Investments, Gifts, Crypto)
General remittances face the highest TCS rates:
- Coverage: Includes overseas equity investments, property purchases, gifts to relatives abroad, and cryptocurrency exchange transfers
- Application: TCS applies on the amount exceeding the annual threshold
- Documentation: Purpose code declaration affects TCS calculation
Can you remit more than USD 250,000?
High-net-worth individuals and those facing exceptional circumstances sometimes need to exceed the standard USD 250,000 annual limit. While the LRS ceiling appears rigid, the Reserve Bank of India provides mechanisms for legitimate needs beyond this threshold.
Exceeding the limit requires prior RBI approval through your authorised dealer bank-. The central bank evaluates requests based on specific criteria, considering the purpose, urgency, and supporting documentation. Valid exceptions typically include medical emergencies requiring expensive overseas treatment or specialised education programmes where institution fees exceed standard limits.
What documents are required for outward remittance?
With limits and exceptions clarified, successful remittance depends on proper documentation. Banks require specific paperwork to process international transfers while ensuring tax on foreign remittance compliance.
Essential documents for LRS remittances include:
- Form A2: Mandatory FEMA declaration for all remittances-
- PAN Card: Required for all LRS transactions regardless of amount-
- Source of Funds: Bank statements demonstrating fund availability
- Purpose Documentation: Education admission letters, medical estimates, property agreements
- Identity Proof: Passport, Aadhaar for KYC compliance
- Address Verification: Recent utility bills or bank statements
Banks may request additional documents based on remittance purpose and amount. Education remittances funded through loans require loan sanction letters from recognised financial institutions.
How to minimise tax on outward remittance?
Understanding documentation leads naturally to tax optimisation strategies. Legal methods exist to reduce TCS burden while maintaining full compliance with fema limit for outward remittance regulations.
Strategy 1: Financial Year Planning
Time major remittances across March and April to utilise threshold benefits across two financial years. This approach effectively doubles your tax-free remittance capacity.
Strategy 2: Family Member Distribution
Split remittances among family members, as each resident individual receives separate threshold benefits. Ensure proper documentation showing legitimate fund sources for each remitter.
Strategy 3: Education Loan Benefits
For education expenses, consider loans from notified financial institutions to access preferential TCS treatment. Compare loan interest costs against TCS savings for optimal decisions.
Optimize Global Cash Flow for International Businesses with Razorpay MoneySaver Export Account
While the LRS limit governs outward remittances for individuals, businesses managing international payments face different challenges. The Razorpay MoneySaver Export Account addresses inward payment efficiency for Indian exporters and freelancers receiving funds from abroad.
This solution enables opening local bank accounts in over 160 countries instantly, including major markets like the US, UK, and Europe. By receiving payments locally and settling in India, businesses save up to 50% on transfer fees compared to traditional wire transfers, improving cash flow and retaining more revenue.
Optimise Global Cash Flow with Razorpay
Receive international payments locally, settle in INR, and cut transfer fees by up
to 50%—no SWIFT delays or hidden forex costs.
Conclusion
The limit of outward remittance from india remains USD 250,000 per financial year for resident individuals under LRS, approximately ₹2,08,45,000 at current exchange rates-. Recent regulatory proposals aim to restrict passive investments like foreign time deposits, signalling tighter oversight of remittance purposes-.
For businesses operating outside LRS constraints and individuals maximising their remittance efficiency, understanding both regulatory limits and tax implications proves essential. Consult qualified tax professionals for complex transactions while exploring digital solutions that simplify compliance and reduce transaction costs.
FAQs:
1. Is the LRS limit applicable to private limited companies?
No, the USD 250,000 LRS limit applies only to resident individuals, including minors-. Corporates, partnership firms, and HUFs are governed by different FEMA regulations and operate without capped limits for genuine current account transactions.
2. What is the new TCS exemption limit for 2025?
The Tax Collected at Source rules for foreign remittances continue evolving. Specific threshold changes depend on government notifications and budget announcements affecting different remittance categories.
3. Can I carry forward my unused LRS limit to the next year?
No, the LRS limit operates on a financial year basis (April to March) and is non-cumulative-. Any unused portion of the USD 250,000 limit expires on March 31st and cannot be carried forward.
4. How much tax is deducted on education loans for studying abroad?
Education remittances funded through loans from specified financial institutions receive preferential TCS treatment compared to self-funded education expenses. Exact rates depend on current tax regulations and loan terms.
5. Is a PAN card mandatory for sending money abroad?
Yes, providing a Permanent Account Number (PAN) is mandatory for all outward remittances under the Liberalised Remittance Scheme, regardless of transaction amount-.
6. Do family members have separate LRS limits?
Yes, every resident individual, including minors, has an independent limit of USD 250,000 per financial year-. Family members can pool these limits to purchase joint assets abroad, provided all remitters become co-owners.
