RAS question
The Liberalised Remittances Scheme (LRS) allows resident individuals to remit up to:
Correct answer: (B) $250,000 per financial year.
Under the Liberalised Remittance Scheme, resident individuals may remit up to USD 2,50,000 per financial year for permitted current or capital account transactions.
Explanation
The RBI FAQ defines LRS as a facility under which all resident individuals, including minors, may freely remit up to USD 2,50,000 in one financial year, counted from April to March. The limit applies to permitted current account transactions, capital account transactions, or a combination of both. The given examples fit that framework: education, travel, medical treatment, investment and gifts are remittance purposes that may fall within the permitted LRS bucket. The key exam point is the ceiling: it is an annual individual limit, not a per-transaction or family-level figure. For purposes other than education or medical treatment, TCS of 20% applies on remittances exceeding Rs 7 lakh.
Why the other options are wrong
- (A) USD 50,000 is below the RBI-stated LRS ceiling, which is USD 2,50,000 per resident individual per financial year.
- (C) USD 100,000 understates the current LRS limit because the RBI FAQ specifies USD 2,50,000 for the financial year.
- (D) USD 500,000 overstates the LRS facility, as the RBI places the annual limit at USD 2,50,000 for resident individuals.
Concept
This tests the external sector portion of the economy syllabus, especially FEMA-linked current and capital account transactions. RAS repeats such figures because they connect household-level foreign exchange use with RBI regulation and balance-of-payments governance.