LIBERALISED REMITTANCE SCHEME (LRS)
FEMA is a policy law which is drafted loosely and its principles keep on changing as individuals keep on changing and there are multiple notifications and rules which can apply to particular transaction. However we advise in such manner in order to avoid unnecessary litigaton.
LRS is brought as a relief to all Indian residents to remit money outside India. It is available to all Resident Individuals Including Minors. A person can remit upto USD 250000 per financial year or equivalent. All earlier facilities for release of exchange or for remittances for current account transactions under Para 1 of Schedule III are subsumed under the overall limit of USD 250,000 – no separate limits for gifts, donations, etc.
HOW IT OPERATES:
Section4 of FEMA states that no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India. Section5 of FEMA states that any person may sell or draw foreign exchange to or from an authorised person if such sale is a current account transaction. Section 6(1) states that any person may sell or draw forex for a capital account transaction.
IMMOVABLE PROPERTY OUTSIDE INDIA UNDER LRS:
Resident individual can send remittances under the Liberalised Remittance Scheme for purchasing IP outside India. It is to remembered that multiple remittances can be clubbed for remittance purposes.
Four members of same family wants to purchase property abroad worth USD 10 million. Can they purchase together and club their individual remittances?
POINTS TO NOTE:
Remittance to non-cooperative countries listed by FATF not allowed under LRS. LRS limits can be lowered by RBI – has been done before also.
OVERSEAS DIRECT INVESTMENT UNDER LRS: –
USD 2,50,000 per Financial Year and Includes investment from balances in EEFC and RFC Accounts.
LRS FOR EMIGRATION:
neral LRS for $250,000 available only for incidental expenses for emigration, not for investment under Visa Programme and earning points for taking citizenship.
However it is not an easy route and a person has to check may regulations and thorough check or agents is also required.
LRS COMPOUNDING: ute to avoid enforcement by ED. Compounding means you are seeking forgiveness Violations would need to be regularized before they can be compounded.
Regularisation can be in the form of filing of forms if investment or transaction is allowed under FEMA at present. Fees should be token and violations are technical in nature. Can be compounded even if transaction was not permissible earlier. Regularisation can be in form of “cease & desist” resulting in winding up of structure or sale of investment in cases where transaction is not permissible under FEMA. Fee can consider actual gains. At the discretion of the Officer .
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