LRS

Full form: Liberalised Remittance Scheme

Investments

LRS allows Indian residents to remit up to USD 2,50,000 per financial year abroad for permitted purposes: education, medical treatment, travel, investment in overseas stocks, maintenance of relatives abroad, and gifting.

In detail

Permitted LRS purposes:nEducation and medical abroad: most commonnOverseas stock investments (US ETFs, individual stocks): growing rapidlynInternational travel: credit card foreign currency spends count towards LRS limitnGifts to non-residents: allowednNot permitted: real estate purchase abroad (not covered under LRS, needs RBI approval)nnTCS on LRS (from October 2023): 20% TCS on remittances above Rs 7L/year (except education with bank loan: 0.5%, education own funds: 5%). TCS is not a final tax -- claimable in ITR.

Formula

LRS annual limit: USD 2,50,000 per person per financial yearnTCS on LRS above Rs 7L: 20% of remittance amount (for non-education purposes)

Real-life example

🇮🇳 India example

Meena invests Rs 5L (approximately USD 6,000) in US S&P 500 ETF via LRS. Under Rs 7L threshold: no TCS. Next year she invests Rs 12L. Bank deducts 20% TCS on Rs 5L excess (Rs 12L - Rs 7L) = Rs 1L TCS. She claims this Rs 1L as advance tax credit in ITR.

Frequently asked questions

Can I invest in US stocks directly from India? ▼

Yes, via LRS through platforms like Vested, INDmoney, Groww (US stocks), or directly through international brokers. Annual limit USD 2,50,000. TCS applies above Rs 7L. US capital gains and dividends are taxable in India -- and you must file FBAR/FATCA declarations if US holdings exceed USD 10,000.