Global investing is no longer limited to large corporations or ultra-rich individuals. Today, even a salaried professional or small business owner in India can invest overseas with ease. The system that makes this possible is the liberalised remittance scheme—a framework that quietly supports India’s growing global financial footprint.

If you’ve ever wondered how Indians legally invest in US stocks, foreign mutual funds, overseas education, or even buy property abroad, this guide will walk you through everything you need to know.

What Is the Liberalised Remittance Scheme?

The liberalised remittance scheme (LRS) is a policy introduced by the Reserve Bank of India (RBI) that allows resident Indians to send money abroad for permitted purposes.

Under this scheme, individuals can remit up to USD 250,000 per financial year outside India without seeking special approval from the RBI. The process is regulated, transparent, and routed through authorized banks.

In simple terms, LRS acts as a legal bridge between Indian capital and global opportunities.

Why Was the Liberalised Remittance Scheme Introduced?

Before LRS, sending money abroad involved heavy documentation and approvals. The RBI introduced the liberalised remittance scheme to:

• Simplify foreign transactions for individuals

• Encourage global exposure and diversification

• Align India with international financial practices

• Track and regulate outward remittances efficiently

This move significantly modernized India’s foreign exchange ecosystem and empowered individuals to think globally.

What Can You Use LRS For?

The liberalised remittance scheme covers a wide range of personal and investment-related purposes.

Permitted Uses Include:

• Investing in foreign stocks, ETFs, and mutual funds

• Overseas education and living expenses

• Medical treatment abroad

• Buying property outside India

• Setting up a business or subsidiary overseas

• Travel and maintenance of close relatives

Not Allowed Under LRS:

• Gambling or lottery-related activities

• Margin trading abroad

• Remittances to countries restricted by the RBI

Understanding these boundaries helps investors stay compliant and avoid penalties.

How LRS Enables Global Investing from India

One of the biggest advantages of the liberalised remittance scheme is global portfolio diversification.

Indian markets are strong, but they don’t offer exposure to global giants like international tech leaders, healthcare innovators, or foreign bonds. LRS enables investors to spread risk across geographies and currencies.

For example:

• If the Indian rupee weakens, foreign investments may gain value

• Global stocks reduce dependence on domestic market cycles

• Overseas assets act as a hedge against inflation

This is why LRS is often called the backbone of global investing from India.

Taxation Rules You Must Know

While the liberalised remittance scheme simplifies transfers, taxation still applies.

Key Tax Points:

• TCS (Tax Collected at Source) applies on remittances above the specified threshold

• Capital gains from foreign investments are taxable in India

• Income earned abroad must be disclosed in your Indian tax return

• DTAA benefits may apply to avoid double taxation

TCS is not an extra tax—it can be adjusted while filing your income tax return.

Step-by-Step: How to Remit Money Under LRS

Using the liberalised remittance scheme is simpler than many assume:

1. Approach your authorized bank or use online banking

2. Submit Form A2 and LRS declaration

3. Provide PAN and KYC documents

4. Specify purpose of remittance

5. Bank processes transfer under RBI guidelines

Most banks now offer digital LRS remittances, making the process quick and efficient.

Common Mistakes to Avoid

Even though the liberalised remittance scheme is straightforward, errors can cause delays or compliance issues.

• Exceeding the annual USD 250,000 limit

• Misreporting the purpose of remittance

• Ignoring tax reporting requirements

• Using unauthorized channels

Staying informed ensures smooth and stress-free global transactions.

Why LRS Matters More Than Ever

As India integrates deeper into the global economy, the liberalised remittance scheme plays a crucial role. It supports wealth creation, education, entrepreneurship, and financial freedom beyond borders.

For modern investors, LRS is not just a regulatory policy—it’s an opportunity engine.

Final Thoughts

The liberalised remittance scheme has transformed how Indians interact with the global financial system. Whether you’re investing overseas, funding education, or expanding a business, LRS offers a secure and compliant pathway.

Understanding this scheme empowers you to think bigger, diversify smarter, and invest with confidence—globally, yet responsibly.