Analyze the structural updates to the Liberalised Remittance Scheme (LRS) and Tax Collected at Source (TCS) rules under recent regulatory guidelines: Statement 1: Under LRS guidelines, a resident individual is permitted to remit up to $250,000 per financial year for permissible current and capital account transactions. Statement 2: Guidelines introduced a basic exemption threshold of ₹10 lakh per financial year across aggregate LRS remittances, below which no TCS is collected for specific general categories. Statement 3: For the purchase of an overseas tour program package, the TCS rate is set at 5% for the first ₹7 lakh per year, after which a higher rate of 20% is applicable, operating completely independently of the general ₹10 lakh LRS investment threshold. Statement 4: Resident individuals are prohibited from using the LRS facility for transactions involving margin trading, lottery winnings, or high-risk jurisdictions flagged as non-cooperative by the FATF. Which of the following accurately reviews the validity of these statements?

Question

Indian Polity · Polity

Verified Solution4 OptionsUpdated: October 2026👁️1 View

Correct answer

Only Statements 1, 2, and 4 are correct; Statement 3 contains incorrect slab thresholds for tour packages.

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Answer 1

Only Statements 1, 2, and 4 are correct; Statement 3 contains incorrect slab thresholds for tour packages.

Answer 2

All Statements 1, 2, 3, and 4 are fully correct and accurately reflect the current regulatory landscape.

Answer 3

Statement 2 is incorrect because the basic exemption threshold was reduced to prevent capital flight.

Answer 4

Statement 4 is incorrect because transactions to FATF non-cooperative countries are permitted subject to a flat 30% TCS.

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