As per the RBI website, with the Liberalised Remittance Scheme (LRS), all resident individuals, including minors, are allowed to freely remit up to USD 2,50,000 per financial year (April – March) for any permissible current or capital account transaction or a combination of both.
Further, resident individuals can avail of foreign exchange facility for the purposes mentioned in Para 1 of Schedule III of FEM (CAT) Amendment Rules 2015, dated May 26, 2015, within the limit of USD 2,50,000 only.
The Scheme was introduced on February 4, 2004, with a limit of USD 25,000. The LRS limit has been revised in stages consistent with prevailing macro and microeconomic conditions.
In the case of the remitter being a minor, the LRS declaration form must be countersigned by the minor’s natural guardian. The Scheme is not available to corporates, partnership firms, HUF, Trusts etc.
What declarations are required to be made to the Bank/RBI for investments through the LRS route?
All banks authorised to remit funds as instructed by clients, have their own forms and declarations. Typically, Clients have to declare the purpose of the remittance and the sum of past remittances in the prevailing FY.
Any declaration to be done while filing Tax returns?
All residents of India have to declare holdings of overseas assets (if any) as part of their annual tax filing. The format is prescribed in the relevant sections of the IT Act. Kristal provides the relevant information to Clients for their filing. Kristal can refer Clients to a CA should they need any advice or services in this regard. The Clients can evaluate the services and commercials independently.
What is the process for declaration credits received on redemption?
Redemptions are retained in the Clients investment account with Kristal and are part of the tax reports provided by Kristal. In case of withdrawal where the Client is bringing the LRS funds back into India, the receiving banks will likely seek details from the Client to ascertain the arrangement under which the Client is bringing the funds back into the country.