If you have made a remittance under the RBI’s Liberalised Remittance Scheme (LRS), you must act immediately on the new LRS rule. According to the new RBI rule, if you have any unused foreign exchange stashed abroad, you must return it within a certain time frame. “With effect from 24 August 2022, the foreign exchange realised/ 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,” mentions the RSM Astute Consulting Newflash report.
The new LRS rule has been updated by RBI to align the same with Regulation 7 of Foreign Exchange
Regulations. The rule will apply to both investors who remit dollars abroad for investment purposes and individuals using forex abroad for medical, education or travel needs.
This is what the new rule says – “Investor, who has remitted funds under LRS can retain, reinvest the income earned on the investments. The received/realised/unspent/unused foreign exchange, unless reinvested, shall 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, as the case may be, in accordance with Regulation 7 of Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015.
The new rules will also apply to individuals who buy dollars in India from authorised dealers while travelling abroad.
“A person being an individual resident in India shall surrender the received/realised/unspent/unused foreign exchange whether in the form of currency notes, coins and travellers cheques, etc. to an authorised person within a period of 180 days from the date of such receipt/realisation/purchase/acquisition or date of his return to India, as the case may be.”
As far as the implication of the new LRS rule is concerned, RSM Astute Consulting Newflash report writes – The resident individual is mandatorily required to either invest the funds in securities outside India or expend the same for any purpose specifically permitted under the Master Direction No. 7/2015-16 within the period of 180 days.
Considering the requirement for repatriation of funds within 180 days as introduced in the Master Direction No. 7/2015-16, with respect to the unutilised funds remitted under LRS prior to 24 August 2022, the first period of such 180 days since the commencement of such provision has expired in February 2023.
Also Read: RBI’s LRS permits Indians to remit up to 2.5 lakh US dollars annually – Here’s what is Liberalised Remittance Scheme
Further, it seems that individual investors who have remitted funds under LRS prior to 24 August 2022 were also required to repatriate the unspent/ unused foreign exchange back to India unless the same is reinvested. However, there is no specific clarification issued in this respect.”