Current Affairs · Banking and Finance Regulations
A resident individual in India intends to utilize the Liberalised Remittance Scheme (LRS) during the financial year 2024-25. The individual has already remitted 180,000 USD for current account transactions (education and medical expenses) and now seeks to remit an additional 100,000 USD to acquire unlisted shares of a foreign startup. Under the current RBI guidelines and Finance Act provisions applicable for the period, evaluate the legality and Tax Collected at Source (TCS) implications of this additional remittance.
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The individual can remit the entire amount without limits provided prior approval is obtained from the Ministry of Finance for overseas direct investment.
- 2The remittance will exceed the annual aggregate LRS limit of 250,000 USD per financial year, and any permitted remittance for investments beyond 7 lakh INR attracts a TCS rate of 20%.✓
- 3The remittance is prohibited because current account expenses like education and medical costs do not count toward the overall aggregate limit under LRS.
- 4The remittance is fully allowed because the limits for capital account transactions and current account transactions are maintained completely separate under LRS.
Correct answer
The remittance will exceed the annual aggregate LRS limit of 250,000 USD per financial year, and any permitted remittance for investments beyond 7 lakh INR attracts a TCS rate of 20%.
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