By S&S Co. Advocates & Solicitors · Published 30 September 2026 · Informational content, not legal advice: see our disclaimer
Who the Scheme Applies To, and Why It Matters for NRI Families
The Liberalised Remittance Scheme (LRS), administered by the RBI under FEMA, governs how much money a resident individual in India can remit abroad in a financial year, for a wide range of permitted purposes, without needing specific case-by-case RBI approval. Though the Scheme applies to resident Indians rather than to NRIs themselves, it is directly and frequently relevant to NRI families, since it governs how much a resident parent, sibling, or other family member in India can send to support an NRI relative abroad, for education expenses, medical treatment, general maintenance, or gifts, and misunderstanding the Scheme's limits and permitted purposes is a common, avoidable source of compliance difficulty for families with members on both sides of the border.
The Current Limit and What It Covers
Under the LRS, a resident individual can remit up to USD 250,000 (or its equivalent) per financial year for permitted current and capital account transactions combined: this limit is periodically reviewed and adjusted by the RBI, so the specific figure in force should always be confirmed against the current Master Direction rather than assumed to remain fixed indefinitely. Permitted purposes cover a wide range, including funding a family member's overseas education, meeting medical treatment expenses abroad, maintenance of close relatives residing abroad, gifts to relatives or others, and certain capital account transactions such as acquiring foreign property or making overseas investments, subject to the overall annual cap applying across all purposes combined, not as a separate allowance for each category.
The Family-Support Use Case Specifically
For NRI families, the maintenance-of-relatives and gift purposes are frequently the most relevant: a resident parent supporting a child studying or settling abroad, or resident siblings supporting an elderly or unwell relative who has relocated overseas, can use the LRS to remit funds for this purpose, subject to the overall annual cap. Families should keep in mind that the cap applies per remitter (the resident individual sending funds), not per recipient, so if multiple resident family members are each separately remitting funds to the same NRI relative abroad, each remitter has their own separate USD 250,000 annual allowance, which can matter for families planning larger transfers by spreading them across more than one family member's individual allowance, provided each remittance genuinely reflects that individual's own independent decision and resources rather than being a disguised, aggregated transfer structured merely to circumvent a single person's cap.
What Falls Outside the Scheme
The LRS does not cover every kind of outward remittance: certain transactions remain specifically prohibited regardless of amount (remittance for purposes such as margin trading, lottery winnings, or to countries or entities specifically identified as high-risk under applicable regulations), and certain other transactions fall under separate, distinct regulatory frameworks rather than the LRS itself (for instance, outward remittances connected to a resident individual's business or trade activities, which are generally governed by separate current-account transaction rules rather than the LRS's individual remittance framework). Families should confirm that their intended purpose for sending money abroad genuinely falls within an LRS-permitted category before assuming the Scheme covers it.
Documentation and Reporting
Banks processing an LRS remittance will generally require the remitter to complete specified declaration forms confirming the purpose and that the remittance falls within the applicable annual limit (taking into account any other remittances already made by that individual in the same financial year across any bank), along with standard KYC documentation. Because the annual cap is tracked per individual across the financial year regardless of which bank or branch processes a specific remittance, resident individuals making multiple remittances during a year, whether to the same or different recipients, and whether through the same or different banks, should keep their own running total to ensure they do not inadvertently exceed the cumulative annual limit.
Practical Guidance for Families
Resident family members regularly supporting an NRI relative abroad should track their own cumulative LRS remittances across the financial year, confirm the current annual cap and permitted-purpose list against the RBI's current Master Direction before assuming last year's rules still apply, and, where a planned transfer approaches or would exceed the individual annual cap, discuss with a bank or advisor whether spreading remittances across more than one genuinely independent family member's own allowance is a realistic and properly structured option for the specific situation.
Frequently Asked Questions
What is the Liberalised Remittance Scheme?
An RBI scheme under FEMA governing how much a resident individual in India can remit abroad in a financial year, for a wide range of permitted current and capital account purposes, without needing specific case-by-case RBI approval.
How much can a resident individual send abroad under the LRS?
Up to USD 250,000 (or its equivalent) per financial year for permitted purposes combined, though this limit is periodically reviewed by the RBI and should be confirmed against the current Master Direction in force.
Can a resident parent use the LRS to support a child living abroad?
Yes: maintenance of close relatives residing abroad and gifts to relatives are among the LRS's permitted purposes, subject to the individual remitter's overall annual cap.
Does the LRS cap apply per family or per individual remitter?
Per individual remitter: each resident individual has their own separate annual allowance, so multiple family members can each remit within their own cap, provided each remittance genuinely reflects that individual's own independent decision rather than a disguised aggregated transfer.
Does the LRS cover every kind of outward remittance?
No: certain transactions are specifically prohibited regardless of amount, and some other transactions (such as those connected to business or trade activities) fall under separate regulatory frameworks rather than the LRS's individual remittance rules.
References & Further Reading
This guide provides a general overview of the Liberalised Remittance Scheme. The annual cap and permitted-purpose list are periodically reviewed by the RBI, and the current Master Direction should be checked before relying on any specific figure.
- Foreign Exchange Management Act, 1999, and the RBI Master Direction on Liberalised Remittance Scheme for Resident Individuals.
- FEMA (Current Account Transactions) Rules, 2000, and FEMA (Non-Debt Instruments) Rules, 2019: related current and capital account transaction frameworks.