What are the RBI guidelines for the LRS?

  • The limit. USD 250,000 per resident individual per financial year, covering permitted current and capital transactions together. The figure has been unchanged since 26 May 2015. Banks may allow more for studies or medical treatment abroad, against an estimate from the institution or doctor. [1]

  • Who can use it. Resident individuals, including minors. It isn't available to companies, partnership firms, HUFs or trusts. [1][2]

  • Permitted capital uses include:

    • opening a foreign currency account abroad
    • buying property abroad
    • direct and portfolio investment abroad under the 2022 Overseas Investment Rules
    • rupee loans to NRI relatives (interest-free, for at least one year)

    [1]

  • Not permitted:

    • prohibited items, such as lottery tickets
    • trading in foreign exchange abroad
    • margin payments to overseas exchanges
    • capital remittances to countries the FATF lists as non-cooperative
    • payments to people or entities the RBI has flagged as terrorism risks

    [1][2]

  • Conditions:

    • your PAN is mandatory, with Form A2
    • banks may not lend to fund capital remittances
    • foreign exchange that is unused, or realised and not reinvested, must be brought back within 180 days

    [1]

Tax collected at source (TCS) on LRS transfers

The rates under the Finance Act 2026 as passed: [3][4]

Purpose TCS above ₹10 lakh a year
Education or medical treatment 2% (from 1 April 2026)
Other purposes, including property and investment 20%

Overseas tour packages carry 2% from the first rupee, since April 2026. TCS counts as tax paid on your behalf, so it is credited against your Indian tax. Sources: [3][4].

Setting up or investing in a UAE company from India

A resident individual can invest in a UAE company under India's 2022 Overseas Investment Rules, within the LRS limit. The conditions: [5][6]

  • the company must be an operating business, not one in financial services (anything that would need an Indian financial regulator's registration or licence)
  • it must not deal in real estate trading or gambling
  • if you have control (10% or more of the voting rights counts), the company may not have its own subsidiaries
  • you may not lend to the company
  • the investment is reported through your Indian bank, with an annual performance report

An Indian chartered accountant or lawyer advises on your FEMA position.

Company formation in Dubai and the UAE →

Buying property in Dubai from India

Indian residents may buy property abroad from a non-resident with LRS money. LRS remittances by resident relatives may be combined for the purchase, if each relative meets the scheme's terms. The transfer carries 20% TCS above ₹10 lakh a year. Property bought while you were non-resident can be kept when you return to India. [1][3][6][7]

Reporting foreign assets while resident

While you are a resident and ordinarily resident individual, every foreign asset must be reported in Schedule FA of your Indian tax return:

  • a Dubai property
  • UAE bank accounts
  • shares in a UAE company

You must file a return to report them even if they earn nothing. Failing to report foreign assets can lead to penalties and prosecution under the Black Money Act 2015. [4][8][10]

After you become non-resident

The LRS no longer applies. Money can be sent abroad from NRE accounts freely, and from NRO balances up to USD 1 million per financial year. [9] Your Indian tax status after moving → NRE and NRO accounts explained →

How Marlborough Gulf helps

What we do:

  • We set up and administer the UAE side of your structure: the company, its accounts and its UAE tax position.
  • We coordinate the timing with your Indian advisers.

What others do:

  • An Indian chartered accountant or lawyer advises on your FEMA position, ODI reporting and your Indian tax.
  • Your Indian bank processes the remittance.
Book a consultation

Questions people ask

What is the foreign remittance limit for India in 2026?

USD 250,000 per resident individual per financial year under the LRS. [1]

What is the new rule of LRS?

From 1 April 2026, TCS on education and medical remittances above ₹10 lakh fell to 2%. Other purposes remain at 20% above ₹10 lakh. [3]

Can an NRI use the LRS?

No. The LRS is for resident individuals. NRIs send money abroad from NRE or NRO accounts. [1][2][9]

Can I buy a flat in Dubai from India?

Yes, within the LRS limit, with TCS above ₹10 lakh, and the property must be reported in Schedule FA while you're resident. [3][6][8]

This guide is general information about Indian rules, not advice on your position. Take advice from a qualified Indian chartered accountant before sending money abroad.

Related guides

Sources

  1. RBI, Master Direction – Liberalised Remittance Scheme (FED MD No. 7/2015-16), updated 6 Sep 2024 (latest version on the RBI site, 29 Oct 2026), paras A.1–A.19. https://www.rbi.org.in/Scripts/BS_ViewMasterDirections.aspx?id=10192
  2. RBI, Liberalised Remittance Scheme FAQ, Q1–Q2, updated 6 Apr 2023. https://rbi.org.in/Scripts/FAQView.aspx?Id=115
  3. The Finance Act, 2026 (No. 4 of 2026), as passed, section 85 (amending the TCS table in s.394(1) of the Income-tax Act 2025), Gazette of India, 30 Mar 2026. https://egazette.gov.in/WriteReadData/2026/271439.pdf
  4. Income-tax Act 2025, s.263(1)(a)(ix) and (b), s.390(5) and s.394(1) Table rows 7 and 8, Gazette of India, 21 Aug 2025. https://egazette.gov.in/WriteReadData/2025/265620.pdf
  5. RBI, Master Direction – Overseas Investment (FED MD No. 15/2024-25), updated 1 Apr 2026, paras 16, 17, 21(3) and 22. https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12710
  6. Foreign Exchange Management (Overseas Investment) Rules 2022, Rules 19 and 21, Schedule III (RBI copy). https://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=5087
  7. RBI, Purchase of Immovable Property FAQ, Part I Q1, updated 6 Apr 2023. https://www.rbi.org.in/commonman/english/scripts/FAQs.aspx?Id=1855
  8. Income Tax Department, "Step-by-Step Guide to Fill FSI, TR, and FA Schedule in ITR", March 2026. https://www.incometax.gov.in/iec/foportal/sites/default/files/2026-03/Step%20by%20Step%20Guide%20FA%20FSI.pdf
  9. RBI, Master Direction – Deposits and Accounts (FED MD No. 14/2015-16), updated 2 Sep 2026, paras 4.4 and 6.8. https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10198
  10. Income Tax Department, "Enhancing Tax Transparency on Foreign Assets & Income: Understanding CRS & FATCA", Nov 2024. https://www.incometax.gov.in/iec/foportal/sites/default/files/2024-11/Enhancing%20Tax%20Transparency%20on%20Foreign%20Assets%20and%20Income.pdf