As you would be aware, resident individuals are permitted to remit upto USD 250,000 per Financial Year (FY) under the Liberalized Remittance Scheme (LRS) for specified purposes.
RBI had recently updated Master Direction No. 7/2015-16 on LRS on 24 August 2022, to align the same with Regulation 7 of Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015 [Notification No. FEMA 9(R)/2015-RB dated 29 December 2015].
The resident individuals are now mandatorily required to either invest the funds in securities outside India or expend the same for any purpose specifically permitted under the Master Direction No. 7/2015-16 within the period of 180 days. Any unutlised amount sent under LRS is required to be repatriated back to India within a period of 180 days. This would also cover any accruals on such investments, which has not been reinvested within a period of 180 days.
There is an ambiguity faced by resident individuals with respect to applicability of said time limit for various remittances sent under LRS. Accordingly, it is recommendable that the resident individual must approach their Authorised Dealer Banks and confirm if the remittances sent under LRS, which are not invested, are required to be repatriated back to India within 180 days.
In this newsflash, we have covered the significant aspects of this requirement.