The last date for overseas remittance is nearing. RBI allows Indians to remit a fixed amount of funds abroad in each financial year. As the financial year ends on March 31, those looking to maximize the benefit may send dollars anytime before the financial year ends. For the purpose of investing abroad, investors need to send dollars abroad.
In each financial year, under the RBI’s Liberalised Remittance Scheme (LRS), every resident person, even a minor (countersigned by a guardian), is permitted to remit up to 2.5 lakh US dollars (USD 2,50,000). The number of transactions allowed each year is not limited for the Indian resident. If one remits 2.5 lakh dollar before March 31 and does a similar transaction in the beginning of the next financial year, almost 5 lakh dollars can be sent abroad per individual over a period of a few days.
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The rules state that foreign exchange (forex) can only be remitted for permissible current account transactions, capital account transactions, or a combination of the two.
If you want to invest in stocks, real estate, or other assets in another country, the LRS rules will classify it as a capital account transaction. Only certain capital account transactions are permitted under LRS rules, such as opening a bank account abroad, also known as a Foreign Currency Account, purchasing real estate property abroad, and making investments in shares, mutual funds, and debt instruments, among other things.
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For the purpose of making an overseas transaction or investing or spending abroad, one must first convert Indian rupees into US dollars. Such transactions are subject to the Liberalized Remittance Scheme’s regulations (LRS). Simply said, if you are a resident of India, you must purchase dollars from an authorised dealer (the bank) in India using Indian rupees (INR). The money can then be used to buy property or other assets like US shares by sending it abroad or spending it there. Any freely convertible foreign currency other than dollars may be used for the remittance.
You must return any unutilized foreign currency you may have kept overseas within a specific amount of time, under the new RBI regulation. With effect from 24 August 2022, the foreign exchange realized/ unspent/ unused and not reinvested, is to be repatriated and surrendered to an authorised person within a period of 180 days from the date of such receipt/ realisation/ purchase/ acquisition or date of return to India.