The Liberalised Remittance Scheme (LRS) is an initiative by the Reserve Bank of India (RBI) that allows resident individuals to remit funds abroad for various permissible purposes. Introduced in 2004, the LRS has evolved over time to meet the changing needs of Indian investors and global economic trends. This article aims to simplify the concept of LRS and explain how you can invest in US stocks from India using this scheme. It covers key details such as the scheme’s objectives, permissible transactions, remittance limits, tax implications, and recent updates.
What is the Liberalised Remittance Scheme?
The LRS is a framework designed by the RBI that facilitates the outward remittance of funds by resident individuals for specific current and capital account transactions. It was introduced to make global financial transactions more accessible for Indian residents. Under the scheme, individuals can remit funds abroad without needing prior RBI approval—making it an ideal route for those wondering, Can I invest in US stocks from India? The answer is yes—LRS is the legal pathway to do so.
RBI LRS Guidelines
As per the latest guidelines, all resident individuals (including minors) are eligible to remit up to USD 250,000 per financial year under the LRS. This remittance limit applies to both current and capital account transactions. However, entities like corporates, partnerships, HUFs, and Trusts are not eligible under LRS.
For individual investors looking to explore international markets, especially those asking, “How can I invest in US stocks from India?”, this scheme provides a convenient starting point.
What Transactions Are Permitted Under LRS?
Under the LRS, individuals can remit money for a wide range of permissible purposes, such as:
- Education: Tuition fees, living expenses, and related costs at foreign universities.
- Travel: Business or personal travel abroad.
- Medical Treatment: Expenses for treatments or consultations outside India.
- Investments: Purchasing shares of foreign companies, mutual funds, ETFs, and more.
- Gifts & Donations: Sending money to family or making donations to global causes.
- Maintenance of Relatives: Financial assistance to family members living abroad.
If you’re considering international stock trading and wondering, “Can I invest in US stocks from India legally?”, the LRS explicitly permits such investments under the ‘capital account transactions’ category.
LRS and Investing in US Stocks
One of the most popular uses of the LRS today is for investing in US stock markets. Indian investors can open an overseas trading account through either a foreign brokerage or a domestic broker partnered with international platforms. Once the account is set up, funds can be transferred under the LRS to begin trading or investing in stocks like Apple, Google, Amazon, and more.
This makes the process straightforward for those asking, How can I invest in US stocks from India without breaking any rules?”—just ensure all remittances are routed through an authorized dealer (AD) bank and declared properly.
LRS Remittance Limit
The annual cap for remittance under LRS is USD 250,000 per person, which is equivalent to around INR 2 crore per financial year (subject to currency fluctuations). This is more than sufficient for retail investors planning to invest in US stocks or diversify globally. For minors, the form must be signed by a guardian on their behalf.
Tax Implications of Using LRS
Under the current tax laws, outward remittances under the LRS are subject to Tax Collected at Source (TCS). As of the 2025 Union Budget, the following TCS rates apply:
- Education (via loan from a financial institution): No TCS up to INR 10 lakh; 0.5% above that.
- Medical Treatment: No TCS up to INR 10 lakh; 5% above that.
- Other Purposes (including investments): 20% TCS on amounts exceeding INR 10 lakh.
However, this TCS amount is not an additional tax—you can claim it as a credit while filing your income tax returns in India.
New LRS Rules in 2024
In July 2024, the RBI updated LRS guidelines to allow remittances to International Financial Services Centres (IFSCs). This opens the door for Indian investors to access a wider range of global financial products, including advanced trading platforms and asset classes, all from within India’s regulatory framework.
How to Send Money Abroad Using LRS
To remit funds abroad, follow these steps:
- Choose an Authorized Dealer (AD) Bank.
- Fill in the LRS application cum declaration form.
- Submit supporting documents for identity, purpose, and source of funds.
- The bank verifies the information and processes the remittance.
Once approved, the funds are transferred to your international trading or investment account.
LRS for Students, Travel, and Investment
Besides investments, the LRS is widely used by students studying abroad to pay for tuition, accommodation, and daily expenses. Travelers also use it to purchase foreign exchange for personal or business trips. The flexibility of LRS makes it a versatile financial tool not just for investing but also for covering life’s global opportunities.
Conclusion
If you’ve ever asked, “Can I invest in US stocks from India?”, the answer is a clear yes—through the Liberalised Remittance Scheme. It offers a legitimate and streamlined method to access international markets, diversify your portfolio, and explore global opportunities. Whether you’re a student, traveler, or an aspiring investor, the LRS is your gateway to managing finances beyond borders.
