The LRS: Your "Financial Passport" to the World

What is the LRS?

The LRS is a rule created by the Reserve Bank of India (RBI) that allows individual Indian residents to send a certain amount of money out of the country every year for various purposes - including buying stocks in foreign markets.

• The Limit: You can send up to $250,000 (USD) per financial year.

• Who can use it? Any individual resident in India (including minors, with a guardian's help). It is not available for companies or firms.

What can you use this "Passport" for?

While we are focusing on stocks, the LRS covers many things:

• Investing: Buying shares on the NASDAQ or NYSE.

• Education: Paying for college tuition abroad.

• Travel: Spending money on a dream vacation in Europe or the US.

• Property: Buying a house or apartment in another country.

The "TCS" Gatekeeper (Tax Collected at Source)

To keep track of all this money leaving the country, the government has a rule called TCS.

• The Rule: If you send more than ₹7 Lakhs abroad in a year for investments, your bank will collect 20% tax upfront.

• Is it a fee? No! It’s an advance tax. You can claim this full amount back (or use it to pay your other taxes) when you file your Income Tax Return (ITR) at the end of the year. It’s essentially a "security deposit" with the government.