For many NRIs and High Net-Worth Individuals (HNIs), the goal isn’t just earning abroad—it’s also diversifying investments globally. What if you’re an NRI earning in India or managing Indian income?
That’s where the Liberalized Remittance Scheme (LRS) comes in. It’s a powerful route that allows resident Indians to send money abroad—legally—for investment, education, travel, and more.
But what about NRIs? Can they use LRS too? Let’s simplify it.
Table of Contents
What is LRS?
LRS is a facility offered by the Reserve Bank of India (RBI) that allows resident Indians to remit up to USD 250,000 per financial year to a foreign account.
This remittance can be used for foreign investments, buying property abroad, gifting money, education, medical treatment, or even international travel.
Can NRIs Use LRS Directly?
No. LRS is strictly for resident Indians.
If you’re officially an NRI as per FEMA guidelines, you’re not eligible to send money abroad under LRS from your NRO/NRE accounts.
However, you can still benefit from LRS indirectly—here’s how.
How NRIs Can Leverage LRS for Cross-Border Investing
✅ If You Have Resident Family in India
NRIs often invest abroad in their child’s or spouse’s name using the LRS limit of resident family members.
Example: Your parents live in India and have savings in INR. They can use LRS to gift or invest USD 250,000 per year per individual into foreign assets in your joint name or their own.
✅ If You Recently Returned to India
If you’ve returned to India and changed your status back to “resident,” you can use LRS freely.
Tip: Wait until your residential status changes officially before initiating large foreign transfers.
✅ Gift Received from a Resident
NRIs can receive funds from residents (using their LRS limit) as gifts. Once received in your foreign account, you can use it for investment abroad.
Important: Ensure compliance with gift tax rules, and document the relationship and purpose clearly.
What Can Be Done Under LRS?
Here are common use-cases for LRS:
- Invest in foreign stocks, ETFs, mutual funds
- Buy real estate abroad
- Send money for children’s education
- Pay for international medical treatment
- Set up overseas businesses or joint ventures
Note: Crypto investments abroad were once allowed, but are currently restricted—always check with your bank before remitting.
Things NRIs Must Know
Tax Implications
While residents using LRS are subject to TCS (Tax Collected at Source), NRIs receiving LRS-based gifts or investments should report them clearly in foreign income declarations (especially if residing in countries like the US or Canada).
Keep proper documentation for source of funds to avoid tax complications in both India and your resident country.
Banking & KYC
Only authorized dealers (banks registered with RBI) can process LRS transfers. NRIs advising family members in India to use LRS should ensure their PAN, Aadhaar, and bank KYC are updated.
Real NRI Scenario: Investing in US Stocks via LRS
Priya, a software engineer in the US, wanted her retired father in India to invest in her US-based startup. Her father legally transferred USD 100,000 via LRS into a joint investment account in the US.
With CA consultation, proper documentation, and tax clarity on both sides, the transfer went smoothly—and her startup got the initial capital it needed.
Tips for Safe & Compliant Use of LRS
- For NRIs: Don’t use your NRO/NRE account for outward remittances under LRS—it’s not allowed.
- For Residents: Plan large remittances early in the year to avoid processing delays or exceeding annual caps.
- Always work with a CA or financial advisor before making large international transfers.
- Maintain clear purpose codes and avoid using vague reasons for remittance.
Frequently Asked Questions (FAQs)
1. Can NRIs use LRS to invest abroad from their Indian accounts?
No, the LRS scheme is only applicable to Resident Indians. NRIs cannot remit funds abroad under LRS; they must use their NRO account with repatriation limits.
2. What is the annual limit under the LRS scheme?
Under LRS, Resident Indians can remit up to USD 250,000 per financial year per individual for permissible capital and current account transactions like overseas investments, education, or travel.
3. Can funds be sent abroad under LRS for stock or property investments?
Yes, under LRS, residents can invest abroad in stocks, mutual funds, real estate, startups, and even open foreign bank accounts, subject to RBI guidelines.
4. Are there any taxes on remittances made under LRS?
Yes, TCS (Tax Collected at Source) applies under LRS:
- 5% TCS on remittances above ₹7 lakh (if for education or medical without a loan).
- 20% TCS for most other foreign remittances.
Tax credit can be claimed while filing ITR.
5. How can NRIs repatriate funds abroad if not eligible under LRS?
NRIs must repatriate through their NRO account, with a cap of USD 1 million per financial year, by submitting Form 15CA/15CB and proof of tax paid, if any.
Related Posts You May Like
👉 How NRIs Can Repatriate Funds from India: Complete Step-by-Step Guide
Learn the correct way to transfer funds abroad using NRO accounts, RBI rules, and tax compliance.
👉 NRE vs NRO Account: Key Differences for Tax and Repatriation
Understand how these accounts work, and which one supports easier global investing and repatriation.
👉 TCS on Foreign Remittance: What NRIs & Residents Must Know in 2025
Get clarity on the latest TCS rules under LRS and how they affect international transfers.
Final Thoughts
While LRS is technically not available to NRIs, understanding how your family or your transition status can help you access global investment opportunities is key.
With the right structure, NRIs and HNIs can legally build international portfolios, support global education goals, and create wealth across borders—without violating RBI rules.