What is LRS in Banking? Full Form, Limit & Rules (2025)

In today’s globalized world, Indian residents often need to send money abroad—whether for education, travel, medical expenses, or investments. To regulate and simplify outward remittances, the Reserve Bank of India (RBI) introduced the Liberalised Remittance Scheme (LRS).

But many people still ask: What is LRS? What is LRS in banking? How much money can I send abroad under LRS?

This guide provides a complete understanding of LRS—its full form, meaning, rules, limits, and usage—to help individuals and businesses navigate outward remittances with ease.

What is LRS?

The full form of LRS is Liberalised Remittance Scheme.

Introduced by the RBI in 2004, LRS allows resident individuals in India to remit (send) money abroad for permissible current account and capital account transactions up to a specified limit per financial year.

In simple words, LRS is a facility that lets you send money abroad legally within RBI’s prescribed rules and limits.

LRS Full Form in Banking

In banking, LRS means Liberalised Remittance Scheme, under which banks (called Authorized Dealer (AD) banks) process outward remittances on behalf of customers.

When you approach a bank to send money abroad, they ask you to fill an A2 form and declare that the remittance is under the LRS scheme.

Key Features of LRS

• Introduced by RBI in 2004.
• Applicable only to resident individuals (not corporates, firms, trusts).
• Current annual limit: USD 250,000 per person per financial year.
• Covers both current account transactions (like education, medical expenses, travel) and capital account transactions (like investments, property purchase).
• Requires PAN card for remittance.
• Transactions must comply with FEMA (Foreign Exchange Management Act).

Permissible Transactions under LRS

Current Account Transactions

• Education abroad (tuition fees, living expenses).
• Travel expenses (business, tourism, medical).
• Medical treatment abroad.
• Maintenance of relatives abroad.
• Gift or donation.

Capital Account Transactions

• Investment in shares, mutual funds, bonds abroad.
• Purchase of property outside India.
• Setting up a joint venture or wholly-owned subsidiary abroad.
• Opening foreign bank accounts.

Transactions Not Allowed under LRS

While LRS is liberal, certain remittances are not permitted:

• Remittances to countries identified as high-risk or non-cooperative jurisdictions by FATF.
• Investments in schemes like lotteries, banned products, or margin trading.
• Remittances for activities prohibited under FEMA.
• Remittances exceeding USD 250,000 in a financial year per individual.

LRS Limit – How Much Can You Remit?

The RBI has gradually increased the LRS limit since its introduction.

• 2004: USD 25,000
• 2007: USD 100,000
• 2013: USD 75,000
• 2015 onwards: USD 250,000 per financial year

This means, under LRS 2025, any resident Indian can remit up to USD 250,000 in a financial year (April–March).

LRS in Banking: The Process

Here’s how LRS works in banking when you send money abroad:

1. Approach an Authorized Dealer (AD) Bank – such as SBI, HDFC, ICICI, Axis.
2. Provide Documents – PAN card, ID proof, invoice/requirement proof (e.g., university admission letter).
3. Fill A2 Form – Declaration for outward remittance under FEMA.
4. Specify Purpose Code – RBI has defined purpose codes for each type of remittance (education, travel, etc.).
5. Bank Processes Remittance – Funds are sent via SWIFT transfer to the beneficiary’s overseas account.
6. Reporting to RBI – The bank reports your transaction under LRS in RBI’s monitoring system.

👉 Tip: Use our SWIFT Code Finder Tool to find your bank’s SWIFT code for international transfers.

Taxation under LRS (TCS on Foreign Remittance)

Since October 1, 2020, the Government introduced TCS (Tax Collected at Source) on foreign remittances under LRS.

• 5% TCS on remittances above ₹7 lakh in a financial year.
• For education funded by loans, TCS is 0.5% above ₹7 lakh.
• TCS is adjustable against your final income tax liability.

What are the Benefits of LRS for Indian Residents?

• Global Diversification: Invest abroad, buy foreign shares or property, diversify financial portfolios.
• Hassle-Free Transfers: Elimination of the need for RBI approval for eligible transactions.
• Support for Education/Healthcare: Enables paying foreign tuition, supporting students or relatives overseas.
• Flexibility: Multiple uses—travel, emigration, maintenance, gifting—within a single limit.
• Financial Inclusion: Access to worldwide opportunities in business, investment, and lifestyle.

LRS vs FEMA

• LRS is a scheme under FEMA regulations.
• FEMA (Foreign Exchange Management Act) governs all foreign exchange transactions.
• LRS is one of the key RBI frameworks that allows individuals to send foreign exchange abroad within limits.

LRS and International Trade

While LRS applies only to individuals, importers and exporters use IDPMS (Import Data Processing and Monitoring System) and EDPMS (Export Data Processing and Monitoring System) for trade payments.

👉 Related guides:

• IDPMS Full Form and Meaning
• EDPMS Full Form and Meaning

Conclusion

The LRS full form is Liberalised Remittance Scheme, an RBI framework that allows Indian residents to remit money abroad legally up to USD 250,000 per financial year for permissible purposes.

For individuals pursuing education abroad, investing in foreign assets, or supporting family overseas, LRS is a powerful facility that simplifies remittances while ensuring compliance with Indian regulations.

Exporters and importers, however, should use EDPMS and IDPMS systems, while individuals can rely on LRS for personal remittances.

FAQs

What is the full form of LRS?

The full form of LRS is Liberalised Remittance Scheme.

What is LRS in banking?

In banking, LRS refers to the RBI’s Liberalised Remittance Scheme that allows resident individuals to remit money abroad up to USD 250,000 per year.

What is the LRS limit in 2025?

As of 2025, the LRS limit is USD 250,000 per financial year per individual.

Can NRIs use LRS?

No. LRS is only for resident individuals in India. NRIs cannot remit funds under LRS.

What purposes are allowed under LRS?

Education, travel, medical expenses, gifts, maintenance of relatives, investments, and property purchase abroad are allowed.

What does LRS stand for in the context of Telangana? Is it the same as the RBI scheme? 

No, the LRS in Telangana is a different scheme. It stands for the Layout Regularization Scheme. It is a government initiative to regularize unapproved and illegal housing plots and layouts. It has no connection to the RBI's Liberalised Remittance Scheme, which is for sending money abroad.

What purposes are not allowed under LRS?

Remittances for banned products, lottery, margin trading, or remittances to FATF blacklisted countries are not allowed.

Do I need PAN for LRS?

Yes. PAN card is mandatory to remit funds under LRS.

What is TCS on LRS?

TCS (Tax Collected at Source) is applicable at 5% on remittances above ₹7 lakh under LRS, with a lower rate of 0.5% for education funded by loans.

Can I remit more than USD 250,000 under LRS?

No. The maximum limit is USD 250,000 per financial year. Higher remittances require RBI approval.

How do I send money abroad under LRS?

You can remit through your Authorized Dealer bank by submitting documents, filling the A2 form, and specifying the purpose code.