RBI proposes ₹50 lakh LRS sub-limit explained: What does remittance scheme mean for your overseas investments, travel

Under the Liberalised Remittance Scheme (LRS), resident individuals can remit up to $250,000 (approximately ₹2 crore) in a financial year, from April to March, for permitted current and capital account transactions. These include travel, education, medical treatment, gifts and overseas investments.

According to a Zee Business report on Tuesday, the Reserve Bank of India (RBI) has proposed a ₹50 lakh sub-limit on certain transactions under the LRS.

The proposal is aimed at curbing dollar outflows and supporting India's foreign exchange reserves, according to sources cited in the report. Business travel and pilgrimages may also be brought under the proposed sub-limit.

Education and medical expenses are likely to be excluded from this proposed cap, the report mentions, citing sources.

Remittance means sending money from one country to another. For example, sending money from India to pay for education or travel expenses abroad is an overseas remittance. These rules could directly affect how individuals plan overseas travel and foreign investments.

Manish P. Hingar, Chartered Accountant, Founder and Chief Executive Officer, Fintoo, said the LRS serves as a gateway for global diversification. Under the scheme, resident individuals can send up to a total of $250,000 per financial year for purposes such as travel, education, medical treatment, gifts, and overseas investments.

“Not every transfer counts: NRI account remittances follow separate rules, while investments in international mutual funds in India do not count towards an individual’s LRS limit,” he added.

This means that the LRS limit applies when resident individuals remit money abroad to invest directly in foreign stocks, bonds, or other permitted overseas assets.

The scheme covers several types of permitted overseas transactions, including:

• Private visits to any country, except Nepal and Bhutan
• Gifts and donations
• Going abroad for employment
• Emigration
• Maintenance of close relatives living abroad
• Business travel, attending conferences or specialised training, and travel for medical treatment or check-ups, including accompanying a patient
• Expenses related to medical treatment abroad
• Studies abroad
• Other permitted current account transactions under the Foreign Exchange Management Act (FEMA).

These transactions are subject to the total LRS limit of $250,000 per financial year. The RBI's proposed sub-limit, if introduced, could place an additional restriction on specified categories of spending.

For example, if the overall LRS limit is $250,000 (approximately ₹2 crore) and the proposed ₹50 lakh sub-limit applies to business travel, an individual could remit up to ₹50 lakh for this specified purpose, while the total remittances across all permitted categories would remain subject to the overall $250,000 annual limit.

This means that having unused room under the overall LRS limit may not allow an individual to exceed the separate ₹50 lakh cap on a restricted category.

Under the current rules, the LRS facility cannot be used for prohibited or restricted transactions, including lottery ticket purchases, margin payments to overseas exchanges, foreign exchange trading abroad, or buying Indian companies’ FCCBs in overseas secondary markets.

It does not cover gifts made by a resident to another resident in foreign currency for credit to the recipient’s foreign currency account held abroad under the LRS.

Hingar said RBI has proposed a ₹50 lakh yearly cap on certain LRS spending, such as business travel and pilgrimages, within the $250,000 limit. Education and medical may stay outside it, and some reports suggest overseas investments may need RBI approval.

“It’s only a proposal with no start date, so investors shouldn’t rush remittances; review global allocation once rules are final,” he added.

Sheetal Goel is a Content Producer at Livemint, where she covers corporate developments, personal finance, business trends, markets, and SEBI-related updates. She focuses on simplifying complex financial concepts and presenting them in a clear, reader-friendly manner, thereby helping audiences better understand investment trends, personal finance, and market developments. Her writing focuses on making finance more accessible to everyday readers while maintaining clarity, accuracy, and relevance. <br><br> She holds a degree in Economics (Hons.) along with an MBA in Finance, which has helped her develop a strong foundation in financial analysis, market understanding, and business reporting. Before joining journalism, she worked with finance and broking firms, where she closely followed market developments, investment strategies, and evolving industry trends. This practical exposure strengthened her understanding of financial markets. She has also written content across multiple formats and platforms, including YouTube, LinkedIn, and Instagram. <br><br> Over time, she has developed expertise in covering market-linked stories, investor-focused topics, and regulatory updates in a simplified yet informative style. She also enjoys reading and listening to Hindi poetry, reflecting her appreciation for literature and creative expression beyond the world of markets and numbers.

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