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Foreign Currency Expenses Allowed to an Individual

Foreign Currency Expenses Allowed to an Individual

Are you  planning a holiday abroad ? Are you wondering how much currency you can carry with you? What are the allowed expenses on a foreign tour?

Or maybe your child is going for education abroad. How you are going to fund him?

Can you invest in foreign securities?

Can you purchase an immovable property abroad?

What is allowable expenses on Medical Treatment for me or my wife?

So many questions and you may receive different answers from different people. So, here is a collective piece of information, to answer all your queries and to have clarity on allowable expenses in foreign currency for an Indian resident individual.

Foreign Currency Expenses Allowed to an Individual

Firstly, let us divide expenses in two broad categories, depending upon their nature. One is Capital Account Transactions of a Person Resident in India and another is Current Account Transactions by a Person Resident in India.

What are Capital Account Transactions?

These are on account of building Capital Assets like – investment is foreign securities, shares of foreign companies, transfer or purchase of immovable property abroad, giving guarantee to a person residing abroad, export, import and holding of foreign currency, obtaining loans or overdrafts from persons residing abroad and vice – versa, maintaining foreign currency account in India or outside India, taking out an insurance policy from an insurance company outside India, etc.

Moving on to Current Account Transactions

Current Account Transactions are those transactions we do in our day to day activities. Those are like private visits or travels abroad, education / studies abroad, going abroad for employment, medical treatment expenses, check-ups, attending conferences, gifting to near relative, donations, maintenance of child gone abroad for education and that of close relative abroad, fees, expenses for emigration, donation, travel for business etc.


Understanding Liberalized Remittance Scheme

All the above remittances come under Liberalised Remittance Scheme (LRS) notified by the Reserve Bank of India. This scheme is a liberalization measure to facilitate resident individuals to remit funds abroad for permitted current or capital account transactions or combination of both. These Regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications.

Under the Liberalised Remittance Scheme, Authorised Dealers, means authorised Branches of various Banks, are freely allowed to make remittances or provide foreign currency, for and on behalf of resident individuals up to USD 2,50,000 per Financial Year (April-March) for any permitted current or capital account transaction or a combination of both. This scheme is not available to corporates, partnership firms, HUF, Trusts, etc.

The Scheme is available to all resident individuals including minors.  In case of remitter being a minor, LRS declaration must be countersigned by the minor’s natural guardian.

Remittances under the Scheme can be consolidated in respect of family members subject to individual family members complying with its terms and conditions. However, clubbing is not permitted by other family members for capital account transactions such as opening a bank account / investment / purchase of property, if they are not the co-owners / co-partners of the overseas bank account / investment / property. Further, a resident cannot gift to another resident, in foreign currency, for the credit of the latter’s foreign currency account held abroad under LRS.

 The permissible capital account transactions by an individual under LRS are:

  1. opening of foreign currency account abroad with a bank;
  2. purchase of property abroad;
  • Making investments abroad- acquisition and holding shares of both listed and unlisted overseas company or debt instruments;  acquisition of qualification shares of an overseas company for holding the post of Director; acquisition of shares of a foreign company towards professional services rendered or in lieu of Director’s remuneration; investment in units of Mutual Funds, Venture Capital Funds, unrated debt securities, promissory notes;
  1. Setting up Wholly Owned Subsidiaries and Joint Ventures (with effect from August 05, 2013) outside India for bonafide business subject to certain terms & conditions;
  2. Extending loans including loans in Indian Rupees to Non-resident Indians (NRIs) who are relatives as defined in Companies Act, 2013 now.

The limit of USD 2,50,000 per Financial Year (FY) under the Scheme also includes/subsumes remittances  for current account transactions like private visit; gift/donation; going abroad on employment; emigration; maintenance of close relatives abroad; business trip; medical treatment abroad; studies abroad  available to resident individuals.

Provisions about different current account transactions

Private visits

For private visits abroad, other than to Nepal and Bhutan, any resident individual can obtain foreign exchange up to an aggregate amount of USD 2,50,000, from your Bank (Authorised Dealer) or Full Fledged Money Changer (FFMG), in any one financial year, irrespective of the number of visits undertaken during the year. Further, all tour related expenses including cost of rail / road / water transportation; cost of Euro Rail; passes / tickets, etc. outside India; and overseas hotel / lodging expenses shall be subsumed under the LRS limit. The tour operator can collect this amount either in Indian rupees or in foreign currency from the resident traveller.


Any resident individual may remit up-to USD 2,50,000 in one FY as gift to a person residing outside India or as donation to an organization outside India.

Going abroad on employment

A person going abroad for employment can draw foreign exchange up to USD 2,50,000 per FY from any Authorised Dealer in India.


A person wanting to emigrate can draw foreign exchange from AD Category I bank and AD Category II up to the amount prescribed by the country of emigration or USD 250,000. Remittance of any amount of foreign exchange outside India in excess of this limit may be allowed only towards meeting incidental expenses in the country of immigration and not for earning points or credits to become eligible for immigration by way of overseas investments in government bonds; land; commercial enterprise; etc.

Maintenance of close relatives abroad

A resident individual can remit up-to USD 2,50,000 per FY towards maintenance of close relatives , abroad -‘relative’ as defined in Companies Act, 2013.

Business trip

Visits by individuals in connection with attending of an international conference, seminar, specialised training, apprentice training, etc., are treated as business visits. For business trips to foreign countries, resident individuals can avail of foreign exchange up to USD 2,50,000  in a FY irrespective of the number of visits undertaken during the year.

However, if an employee is being deputed by an entity for any of the above and the expenses are borne by the later, such expenses shall be treated as residual current account transactions outside LRS and may be permitted by the AD without any limit, subject to verifying the bonafides of the transaction.

Medical treatment abroad

Authorised Dealers may release foreign exchange up to an amount of USD 2,50,000 or its equivalent per FY without insisting on any estimate from a hospital/doctor. For amount exceeding the above limit, Authorised Dealers may release foreign exchange under general permission based on the estimate from the doctor in India or hospital/ doctor abroad. A person who has fallen sick after proceeding abroad may also be released foreign exchange by an Authorised Dealer (without seeking prior approval of the Reserve Bank of India) for medical treatment outside India.

In addition to the above, an amount up to USD 2,50,000 per financial year is allowed to a person for accompanying as attendant to a patient going abroad for medical treatment/check-up.

Facilities available to students for pursuing their studies abroad

AD Category I banks and AD Category II, may release foreign exchange up to USD 2,50,000 or its equivalent to resident individuals for studies abroad without insisting on any estimate from the foreign University. However, AD Category I bank and AD Category II may allow remittances (without seeking prior approval of the Reserve Bank of India) exceeding USD 2,50,000 based on the estimate received from the institution abroad.


  1. Purchasing objects of art subject to the provisions of other applicable laws such as the extant Foreign Trade Policy of the Government of India.
  2. Outward remittance in the form of a DD either in the resident individual’s own name or in the name of beneficiary with whom he intends putting through the permissible transactions at the time of private visit abroad, against self-declaration of the remitter in the format prescribed.
  3. Individuals can also open, maintain and hold foreign currency accounts with a bank outside India for making remittances under the Scheme without prior approval of the Reserve Bank. The foreign currency accounts may be used for putting through all transactions connected with or arising from remittances eligible under this Scheme.

One has to keep in mind that Banks would not extend any kind of credit facilities to resident individuals to facilitate capital account remittances under the Scheme. The Scheme is not available for remittances for any purpose specifically prohibited under Schedule I or any item restricted under Schedule II of Foreign Exchange Management (Current Account Transaction) Rules, 2000, dated May 3, 2000, as amended from time to time.

The items under Schedule I are:

Schedule I

Transactions which are prohibited

  1. Remittance out of lottery winnings.
  2. Remittance of income from racing/riding etc. or any other hobby.
  3. Remittance for purchase of lottery tickets, banned /proscribed magazines, football pools, sweepstakes, etc.
  4. Payment of commission on exports made towards equity investment in Joint Ventures / Wholly Owned Subsidiaries abroad of Indian companies.
  5. Remittance of dividend by any company to which the requirement of dividend balancing is applicable.
  6. Payment of commission on exports under Rupee State Credit Route, except commission up to 10% of invoice value of exports of tea and tobacco.
  7. Payment related to “Call Back Services” of telephones.
  8. Remittance of interest income on funds held in Non-Resident Special Rupee (Account) Scheme.

Under Schedule II of Current Account Transaction Rules certain expenses require approval from concern ministry,  like Cultural Tour, Advertisement in foreign print media

LRS is not available for capital account remittances to countries identified by Financial Action Task Force (FATF) as non-co-operative countries and territories as available on FATF website www.fatf-gafi.org or as notified by the Reserve Bank. Remittances directly or indirectly to those individuals and entities identified as posing significant risk of committing acts of terrorism as advised separately by the Reserve Bank to the banks is also not permitted.

Documentation by the remitter

The individual will have to designate a branch of an AD through which all the remittances under the Scheme will be made. The resident individual seeking to make the remittance should furnish Form A2 for purchase of foreign exchange under LRS. It is mandatory to have PAN card to make remittances under the Scheme for capital account transactions.

Investor, who has remitted funds under LRS can retain, reinvest the income earned on the investments. At present, the resident individual is not required to repatriate the funds or income generated out of investments made under the Scheme. However, a resident individual who has made overseas direct investment in the equity shares; compulsorily convertible preference shares of a JV/WoS outside India, within the LRS limit, shall have to comply with the terms and conditions prescribed by the overseas investment guidelines.

To better understand foreign expenses you are allowed as an individual, write to us with your queries.