Remittances to IFSCs under LRS

 RBI Circular dated 10th July, 2024, which is self explanatory.

Attention of Authorised Persons is invited to A.P. (DIR Series) Circulars, i.e., No.11 dated February 16, 2021, No.03 dated April 26, 2023, and No.06 dated June 22, 2023, on remittances to International Financial Services Centres (IFSCs) in India under the Liberalised Remittance Scheme (LRS) and the Master Direction No. 7/2015-16 on LRS dated January 01, 2016 (as amended from time to time).

2. At present, remittances under LRS to IFSCs can be made only for:

1. Making investments in IFSCs in securities except those issued by entities/ companies resident in India (outside IFSC); and

2. Payment of fees for education to foreign universities or foreign institutions in IFSCs for pursuing courses mentioned in the gazette notification no. SO 2374(E) dated May 23, 2022, issued by the Central Government.

For these permissible purposes, resident individuals can open Foreign Currency Account (FCA) in IFSCs.

3. On a review, it has been decided that Authorised Persons may facilitate remittances for all permissible purposes under LRS to IFSCs for:

1. Availing financial services or financial products as per the International Financial Services Centres Authority Act, 2019 within IFSCs; and

2. All current or capital account transactions, in any other foreign jurisdiction (other than IFSCs) through an FCA held in IFSCs.

For these permissible purposes, resident individuals can open Foreign Currency Account (FCA) in IFSCs.

4. Authorised Persons shall bring the contents of this circular to the notice of their constituents and customers. The Master Direction No.7/2015-16 on LRS is being updated to reflect these changes.

Liberalised Remittance Scheme

RBI has vide its circular dated 19th June, 2018 mandated that furnishing of PAN is necessary document while allowing all remittances outside India under the Liberalised Remittance Scheme (LRS). Hitherto, for remittances under US$25,000/- PAN was not mandatory, Now it has become mandatory for any amount being remitted under the Scheme.

Gist of RBI circular is given below:

Please refer to paragraph 18 of the Statement on Developmental and Regulatory Policies of the Second Bi-monthly Monetary Policy Statement for 2018-19released on June 6, 2018. As indicated therein, it has been decided that furnishing of Permanent Account Number (PAN), which hitherto was not to be insisted upon while putting through permissible current account transactions of up to USD 25,000, shall now be mandatory for making all remittances under Liberalised Remittance Scheme (LRS).

2. Further, in the context of remittances allowed under LRS for maintenance of close relatives, it has been decided, in consultation with Government, to align the definition of ‘relative’ with the definition given in Companies Act, 2013 instead of Companies Act, 1956.

3. Master Direction No. 7/2015-16 dated January 01, 2016 on LRS is being updated simultaneously to reflect the above changes.

4. The directions contained in this circular have been issued under Sections 10(4), 11(1) and 11(2) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions/approvals, if any, required under any other law.

https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11309&Mode=0