India Liberalised Remittance Scheme regulations

Indian investors are increasingly using the Liberalised Remittance Scheme (LRS) to move capital into overseas equities and alternative assets. In May 2026, outward remittances under the LRS reached $2.39 billion, with investments in equity and debt more than doubling to $363.6 million compared to the previous year. This trend is attributed to domestic equity market downturns and a desire for international sector diversification.

To manage these flows, the Indian government maintains specific regulatory and tax frameworks. Under the LRS, resident individuals can transfer up to $250,000 per financial year for purposes including education, medical treatment, travel, and investment.

Tax Collected at Source (TCS) applies to remittances exceeding ₹10 lakh. As of April 1, 2026, a 2% TCS rate applies to education and medical expenses above this threshold, while a 20% rate applies to other categories. The Indian Income Tax Department is monitoring these transactions closely, as mismatches between taxpayer filings and departmental data can trigger reassessment notices. Compliance with FEMA rules and proper documentation, such as Foreign Inward Remittance Certificates (FIRC), remains essential for managing both inward and outward funds.