Liberalised Remittance Scheme [LRS]

The Liberalised Remittance Scheme [LRS] is a program implemented by the government of India to facilitate a greater flow of funds remitted to and from India. This scheme was introduced with the aim of reducing transaction costs, increasing the speed of money transfers, and enhancing the attractiveness of investments in India.

What is Remittance?

Remittance is defined as the transfer of money from one country to another. It simply refers to the movement of money from one country to another. It could be money being sent by Indians working abroad and Indian companies who may have people working abroad, or it could also be payments made by ex-pats working in India to their families in their home country, they can do remittances easily through LRS.

Liberalised Remittance Scheme [LRS] Benefits

The Liberalised Remittance Scheme [LRS] is a very simple and straightforward process that anyone can go through without making any fuss. That's why it is very convenient and everyone has access to this facility.

It is also beneficial for businesses because a business can now transfer funds to India, through LRS and then an investor can receive their investment back home. LRS is therefore a great tool for transferring funds between two countries and it comes with some added benefits that make this service even more exciting and beneficial.

There are a few other advantages that come with LRS. For example, transfer timing is not controlled by the Indian government as opposed to other remittance services available in the market. It does not use any specific currency either so there are no issues of volatility with regard to exchange rates.

Significance of Liberalised Remittance Scheme [LRS]

The Liberalised Remittance Scheme [LRS] is a very well-thought-out system, and it is one of the oldest remittance schemes in the world. It has been operating since 1984 and it was then that the name "LRS" was used for the first time for this service. Now, LRS means a lot to Indians living overseas, as well as to those that are about to visit India for business or travel.

Online money transfer has become increasingly popular among people all over the world, but there are still many who prefer physical money transfers from India to their loved ones overseas. But with LRS one can transfer funds now using your phone, Internet or anything else that you may have access to around you at all times.

Liberalised Remittance Scheme [LRS] Eligibility

The Liberalised Remittance Scheme [LRS] is open to everyone including non-residents, NRIs, persons of Indian origin (PIOs), foreign citizens with PIO status and foreign nationals of Indian origin.

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In what Form Can Funds Be Sent?

All forms of money can be sent including cash, cheques and drafts.

Liberalised Remittance Scheme [LRS] has been a great success and has become popular among people all over the world. The Liberalised Remittance Scheme [LRS] is a very simple and straightforward process that anyone can go through without making any fuss. That's why it is very convenient and everyone has access to this facility. It is also beneficial for businesses because a business can now transfer funds to India, through LRS and then an investor can receive their investment back home!

FAQs on Liberalised Remittance Scheme [LRS]

Q1: Why is there a need for Liberalised Remittance Scheme [LRS]?

Liberalised Remittance Scheme [LRS] is the most 'liberalised' scheme and there is demand for it due to the growth of remittances and foreign direct investment.

Q2: What are the benefits of Liberalised Remittance Scheme [LRS]?

The benefits of Liberalised Remittance Scheme [LRS] include the following: -

1. Lower transaction costs than in other countries.
2. There are no limits on the amount that can be transferred under this scheme.
3. Transfers are allowed to be made from bank accounts in India as well as non-resident ordinary (NRO) and non-resident external (NRE) accounts.
4. The remitter's account does not have to be an NRI account, which is a great benefit for those who wish to transfer funds into India but cannot open NRI accounts. It may be noted here that LRS itself is a gateway for making other types of transfers and investments as well.

Q3: Who can use the Liberalised Remittance Scheme [LRS]?

All persons including non-residents, NRIs, persons of Indian origin (PIOs), foreign citizens with PIO status and foreign nationals of Indian origin can use Liberalised Remittance Scheme [LRS].

Q4: How can a taxpayer transfer funds to an NRI account in Liberalised Remittance Scheme [LRS]?

This can be done only after the NRI uses the transfer service of Liberalised Remittance Scheme [LRS] and receives appropriate approval from Income Tax authorities. The person transferring funds to an NRI must file a return in case a certain amount is transferred during the year as per current tax laws. In this case, LRS should not be counted as a remittance.