What is Liberalised Remittance Scheme (LRS) ? Requirement of Form 15CA and Form 15CB ?

 

Liberalised Remittance Scheme (LRS) is a program introduced by the Reserve Bank of India (RBI) on 4th February, 2004 on recommendation of Tarapore committee’s recommendations to facilitate the transfer of funds from India to foreign countries for certain permitted transactions. Under LRS, Indian residents can remit money abroad for various purposes, such as travel, education, medical treatment, investment, and gifting, up to a certain limit.

Since June 2015 the limit under the LRS scheme is USD 250,000 per financial year per person. This means a person can remit up to US$ 250,000 in a financial year without seeking prior approval from the RBI. The scheme is available to all individuals, including minors, and is applicable for any foreign currency account or overseas investment. 

There are certain conditions and restrictions that apply to the LRS scheme like remittance for purchase of lottery tickets, betting and gambling, or illegal activities are prohibited. Additionally, the funds remitted under the LRS scheme cannot be used for trading in foreign exchange abroad or for setting up an overseas entity. 

Overall the main purpose of LRS scheme is to make it easier for Indian residents to remit their funds abroad for legitimate purposes, while also ensuring that the scheme is not misused for illegal activities.

DOES 15CA OR 15CB REQUIRED FOR LRS

The requirement of Form 15CA and Form 15CB for remittance under the Liberalised Remittance Scheme (LRS) is depends upon the nature of transactions.

The form 15CA is an online declaration required to be filed by the remitter with the Authorized Dealer (AD) bank, indicating the purpose of remittance, the amount to be remitted, and the relevant tax details. It is required for remittances other than those for which no remittance declaration is required under the provisions of the Income-tax Act, 1961. The form must be submitted online through the e-filing portal of the Income Tax Department, and a signed copy must be submitted to the AD bank. 

The form 15CB is issued by a chartered accountant (CA) verifying that the remittance is not chargeable to tax, or if it is chargeable, the appropriate tax has been deducted and paid. It is required for remittance of any amount for which Form 15CA is required, and for remittance of any amount to a non-resident, regardless of whether Form 15CA is required or not. 

It is advisable to check with the AD bank for the specific documentation requirements for remittance under the LRS scheme. However, there are certain transaction for that Form 15CA and Form 15CB are not required like remittance for personal travel, education, and medical expenses, and for gifts and donations up to certain limits.

CA KHALID REHMAN

(M.Com, Chartered Accountant)

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