LIBERALISED REMITTANCE SCHEME (LRS) FOR RESIDENT INDIVIDUALS – INCREASE IN LIMIT FROM USD 125,000 TO USD 250,000 AND RATIONALISATION OF CURRENT ACCOUNT TRANSACTIONS – REMITTANCE FACILITIES FOR PERSONS OTHER THAN INDIVIDUALS
A.P. (DIR SERIES 2014-15) CIRCULAR NO.106, DATED 1-6-2015
Attention of Authorised Persons is invited to the A.P.(DIR Series) Circular No. 138 dated June 3, 2014regarding the Liberalised Remittance Scheme (LRS) for resident individuals and the existing guidelines issued under the Foreign Exchange Management (Current Account Transactions) Rules, 2000. On a review, it has been decided to make the following changes for further liberalization and rationalization on the existing guidelines.
Limit and Facilities under LRS
2. AD banks may now allow remittances by a resident individual up to USD 250,000 per financial year for any permitted current or capital account transaction or a combination of both. If an individual has already remitted any amount under the LRS, then the applicable limit for such an individual would be reduced from the present limit of USD 250,000 for the financial year by the amount already remitted. The permissible capital account transactions by an individual under LRS are:
|(i)||opening of foreign currency account abroad with a bank;|
|(ii)||purchase of property abroad;|
|(iii)||making investments abroad;|
|(iv)||setting up Wholly owned subsidiaries and Joint Ventures abroad;|
|(v)||extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 2013.|
3. Further, to facilitate ease of transactions, all the facilities (including private/business visits) for release of exchange/remittances for current account transactions available to resident individuals under Para 1 of Schedule III to the Foreign Exchange Management (Current Account Transactions) Rules, 2000, as amended from time to time, shall now be subsumed under the overall limit of USD 250,000. However, for item numbers as mentioned at (iv)[ emigration], (vii)[expenses in connection with medical treatment abroad] and (viii)[studies abroad] in Para 1 of Schedule III provided at Annex 1, individuals may avail of exchange facility for an amount in excess of the overall limit prescribed under the LRS, if it is so required by a country of emigration, medical institute offering treatment or the university respectively. Gift in Indian Rupees by resident individuals to NRI relatives as defined in the Companies Act, 2013 shall also be subsumed under the LRS limit.
The Notification dated May 26, 2015 containing the revised Schedule III is given in Annex 1.
4. As hitherto, the Scheme cannot be made use for making remittances for any prohibited or illegal activities such as margin trading, lottery, etc.
5. Remittance Procedure
Requirements to be complied with by the remitter
5.1 The resident individual seeking to make the remittances should furnish an application cum declaration in the format indicated in Annex 2 to the AD/ full fledged money changer (FFMC) concerned regarding the purpose of the remittances and declaration to the effect that the funds belong to the remitter and will not be used for the prohibited purposes referred to in Para 4 above. Resident individuals can also purchase foreign exchange from a full fledged money changer (FFMC) for private/business visits. Foreign exchange thus purchased from an FFMC should also be reckoned within the overall LRS limit USD 250,000 and declared accordingly in the application-cum-declaration form submitted to the AD bank.
Requirements to be complied with by the Authorised Persons
5.2 While allowing the facility to resident individuals, Authorised Persons, including AD Category II and FFMCs, are required to ensure that the “Know Your Customer” guidelines and the Anti-Money Laundering Rules in force have been complied with while allowing the transactions.
Requirements to be complied with by the Authorised Dealers
5.3 It is clarified that banks should not extend any kind of funded and non-funded facilities to resident individuals to facilitate capital account remittances under the Scheme.
5.4 The applicants should have maintained the bank account with the bank for a minimum period of one year prior to the remittance for capital account transactions. If the applicant seeking to make the remittances is a new customer of the bank, Authorised Dealers should carry out due diligence on the operations and maintenance of the account.
5.5 No part of the foreign exchange of USD 250,000 shall be used for remittance directly or indirectly to countries notified as non-cooperative countries and territories by the Financial Action Task Force (FATF) from time to time and communicated by the Reserve Bank of India to all concerned.
Reporting of the transactions
6. Authorised Dealers may arrange to furnish on a monthly basis information on the number of applicants and total amount remitted under LRS to the Chief General Manager, External Payment Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai – 400001 through Online Return Filing System (ORFS) only.
7. Facilities for persons other than individuals
7.1 As provided in Para 2 of Schedule III provided in Annex 1, persons other than individuals can make remittances for
|(i)||Donations for educational institutions;|
|(ii)||Commissions to agents abroad for sale of residential flats/commercial plots in India;|
|(iii)||Remittances for consultancy services and|
|(iv)||Remittances for reimbursement of pre-incorporation expenses within the limit and conditions laid down therein.|
7.2 While making the above remittances, such persons shall submit to the concerned AD branch a declaration to the effect that the limits and conditions relating to the remittances have been complied with.
8. All other terms and conditions for making overseas remittances shall remain unchanged.
9. Necessary amendments to the Foreign Exchange Management (Current Account Transactions) Rules, 2000 and the Foreign Exchange Management (Permissible Capital Account Transactions) Regulations, 2000, (Notification No. FEMA 1/2000-RB dated May 3, 2000) have been notified vide GSR No. 426 (E) dated May 26, 2015 and GSR No.425 (E) dated May 26, 2015 respectively.
10. Authorised Persons may bring the contents of this circular to the notice of their constituents and customers concerned.
11. The directions contained in this circular have been issued under Section 10(4) and 11(1) of the Foreign Exchange Management Act, 1992 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.