LRS permits to transfer $250,000 a year
BBN Bureau
Mumbai: Gone are the days when Banks remained tight-lipped over the fund customers sending overseas through their channels. Of late, banks make inquiries about the source of money that individuals are moving abroad, especially to acquire properties in foreign lands.
Sometimes they scan past income statements to figure out the origin of the fund, while a few banks recently inquired whether the money that would be transferred out of the country was a `gift’ from a relative.
Under the Liberalised Remittance Scheme (LRS), resident individuals are permitted to transfer up to $250,000 a year abroad to invest in properties and securities, maintenance of relatives, among other specified purposes. Some of the tax professionals and bankers said authorized dealer (ED) banks are undertaking greater security before clearing LRS remittance.
They said many residents have used the LRS to remit funds since 2004. Similarly, non-resident Indians have remitted money under the regulation allowing them to transfer a million dollars a year from India. However, of late, many ED banks are holding back remittance, citing internal instructions that are not in the public domain or part of any regulation or master direction.
It would be helpful if there’s great regulatory clarity of what is allowed and what is not, said a chartered accountant specialising in tax and matters related to the Foreign Exchange Management Act (FEMA).
Total remittance under LRS rose from $12.68 billion in 2020 -21 to $27.14 billion in 2022-23. According to figures released by the Reserve Bank of India (RBI) which regulates the scheme, remittances crossed $27.4 billion for the April-January period of 2023-24.
