LRS limit

 Under the LRS, all resident individuals, including minors, are allowed to freely remit up to $250,000 per financial year for any permissible current or capital account transaction or a combination of both. You are allowed to invest in shares, bonds and mutual funds abroad, and purchase property, without prior approval of the RBI. The LRS covers remittances in the form of specific expenses as well. Apart from enhancing the LRS limit to $250,000, the RBI has also subsumed under this limit all the current account transactions which were previously outside the scheme ambit but covered under the Foreign Exchange Management (Current Account Transactions) Rules, 2000. While one was earlier allowed to remit up to $25,000 a year towards business travel outside India, over and above the LRS limit, this would now be subsumed under the revised limit. Remittance towards foreign studies was earlier permitted up to $100,000 in an academic year; this too would now be subsumed under the $250,000 window. Similarly, remittances in the form of gifts and donations cannot be made separately and are now under the LRS limit.

These limits are also gross limits. Once you have made a remittance for an amount up to $250,000 during the financial year, you cannot make any further remittances under this scheme during that year. For instance, if you open a broking account abroad and deposit $250,000 through the LRS and later that year, decide you want to withdraw the money and use the proceeds to fund your child's foreign education, you cannot do so.

Even so, the scheme provides a big enough window to productively invest some money overseas. Some foreign platforms ask for regular investment commitment from the investor, failing which the invested money is forfeited. If the RBI decides to bring down the LRS limit in future, you may not be in a position to honour your commitment.

Best Tax Saver Mutual Funds or ELSS Mutual Funds for 2015

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