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What is a Liberalised Remittance Scheme

Under the Liberalised Remittance Scheme (LRS), all Indian individuals can remit up to USD 2,50,000 per financial year to any current or capital account transaction towards study abroad, family maintenance, business/leisure travel, or foreign investments.
  • There are no restrictions on the frequency of remittances. However, the total amount of foreign exchange purchased from or remitted through all sources in India during a financial year should be within the cumulative limit of USD 2,50,000.
  • The scheme enlists authorised dealers such as banks to facilitate foreign exchange between resident Indians and their beneficiaries abroad, using PAN card verification.
  • This scheme is not available to corporates, partnership firms, HUF, or Charitable Trusts.

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Advantages

  • As an international business, you need not open an Indian entity to accept payments.
  • Enable customers to make payments using local payment methods such Netbanking, Debit Card, and UPI.
  • Easily integrate Razorpay Standard Checkout with your website to start accepting payments.
  • Higher success rates.
  • Real-time status for tracking remittance.
  • Fully digital payment remittance solution.
  • Customers do not need to visit banks physically to remit money.
  • Reduces the remittance process from weeks to seconds.

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Use Cases

The following businesses can use our Outward Remittance solutions to provide a seamless international payment experience to their customers:
  • Education
    • Education consultants and remittance service platforms that enable Indian students to pay their foreign university admission payments and tuition fees.
    • Foreign universities that want to collect payment from Indian students through local payment modes such as netbanking and UPI.
    Example: A student can easily pay tuition fees for university admission in the USA using this solution.
  • Travel
    Online travel agencies and destination management companies that Indian travellers work with to book hotel and flight packages for international destinations.     Example: If you want to book a hotel in Dubai for a vacation, you can use this solution to make payments.

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How it Works

Given below is the payment flow on Razorpay Standard Checkout:
  1. The customer clicks the Pay button to open Razorpay Checkout.
Handy Tips
  • If a student is trying to pay their international university fees, which will be debited from their father’s account, then the father’s PAN is needed.
  • Always enter the Payer’s PAN information.
  1. They enter their contact details and click Proceed.
  2. They provide relevant information and click Proceed:
    • For Education-related Payment, the customer must provide:
      1. Payer information (PAN) and select the purpose of payment.
      2. Scanned copies of Passport (front and back), Admission Letter and Loan Sanction Letter.
  3. Customer selects the preferred payment method and completes the payment.
Watch Out!
  • The transaction is subject to approval from our AD bank partner as per LRS guidelines.
  • In case LRS checks fail, Razorpay will initiate the refund.

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FAQs

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1. What is Outward Remittance?

Outward remittance is the money transfer process from India to any foreign country for studying or traveling.

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2. What is Liberalised Remittance Scheme?

According to RBI’s Liberalised Remittance Scheme, all Indian individuals can freely remit up to USD 2,50,000 per financial year to any current or capital account transaction towards foreign education, family maintenance, business/leisure travel, or foreign investments.

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3. What is TCS?

TCS stands for Tax Collected at Source. This tax can be collected in outward remittances when you send money abroad. Sending money does not necessarily mean sending it to a person. It could even mean travelling abroad, buying assets (shopping included), and investing abroad.

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4. What is the TCS limit for outward remittances?

The TCS limit for foreign remittances in India is currently set at 5% for all foreign remittances exceeding ₹7 lakhs in a financial year (April-March). Suppose an individual sends foreign remittances of ₹7 lakhs or more in a financial year. In that case, the bank or authorised dealer will deduct 5% of the remittance amount as TCS before transferring.

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5. What is the new TCS rule in 2023?

The Budget 2023 increased TCS for foreign remittances under LRS from 5% to 20%. This will apply to foreign trips, sending money abroad, and other remittances except for education and medical purposes. This new rule will come into effect from 1 July 2023.‍

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6. Can we claim a TCS refund in ITR?

Yes, you can claim a TCS refund in your Income Tax Return if you have paid more TCS than your actual tax liability. To claim the TCS refund, you must fill out relevant sections in the ITR form and provide supporting documentation. TCS is first offset against your total tax liability, and only the excess TCS amount can be claimed as a refund. Consulting a tax professional or a qualified chartered accountant is advisable if you need clarification or want to know more about claiming a TCS refund in your ITR.

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7. What is LRS Check?

LRS Check validates the LRS guidelines by the AD bank for a given transaction.

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8. What is the TAT for this payment?

The TAT for outward remittances is 48 hours or T+2 working days.

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Next Steps