Master Direction explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section A of the Reserve Bank's Master Direction on the Liberalised Remittance Scheme tells authorised dealers what a resident individual may remit in a financial year, which capital account transactions are covered and which are not, and what the individual must provide. This article walks through paragraphs 1 to 19 of Section A in order. For a plan covering your own remittances, our FEMA advisory team can help.
As per the Master Direction, updated as on September 06, 2024, a resident individual may remit up to USD 2,50,000 per Financial Year (April-March) for any permitted current or capital account transaction or a combination of both. The Scheme is not available to corporates, partnership firms, HUF, Trusts and similar persons, requires PAN, and is not available for purposes prohibited or restricted under Schedules I and II of the Current Account Transactions Rules.
The text and who issues it
The text is the Master Direction - Liberalised Remittance Scheme (LRS), FED Master Direction No. 7/2015-16, dated January 1, 2016, "Updated as on September 06, 2024". It is the Reserve Bank's direction to authorised persons, made under section 11 of the Foreign Exchange Management Act, 1999. A Master Direction is not a rule or a regulation: it says what the bank will ask for and do. Read our articles on section 11 and 12 of the Act and on section 5, current account transactions. Later amendments and circulars should be checked on the Reserve Bank site.
Paragraphs 1 to 5: who and how much
Paragraph 1. Authorised dealers may allow remittances by 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. The Scheme is not available to corporates, partnership firms, HUF, Trusts, etc. Paragraph 2. The limit has been revised in stages from February 4, 2004; the table in the paragraph prints seven dates, from USD 25,000 on February 4, 2004 to USD 2,50,000 on May 26, 2015.
Paragraph 3. The Scheme is available to all resident individuals including minors. If the remitter is a minor, the Form A2 must be countersigned by the minor's natural guardian.
Paragraph 4. Remittances can be consolidated for family members, each family member complying with the terms. Clubbing by other family members is not permitted for capital account transactions such as opening a bank account or an investment if they are not co-owners or co-partners of the overseas account or investment. Property purchases are to follow paragraph 6(ii). A resident cannot gift to another resident, in foreign currency, for the credit of the latter's foreign currency account held abroad under the Scheme.
Paragraph 5. Transactions otherwise not permissible under FEMA, and remittances for margins or margin calls to overseas exchanges or counterparties, are not allowed under the Scheme.
Paragraph 6: permitted capital account transactions
Paragraph 6 lists three: opening a foreign currency account abroad with a bank; acquisition of immovable property abroad, Overseas Direct Investment and Overseas Portfolio Investment in accordance with the Overseas Investment Rules, 2022, the Overseas Investment Regulations, 2022 and the Overseas Investment Directions, 2022; and extending loans, including loans in Indian rupees, to Non-resident Indians who are relatives as defined in the Companies Act, 2013. The Overseas Investment Rules, 2022 are not in the sources consulted for this series; see our guide on ODI for individuals.
Paragraph 7: current account transactions inside the same limit
Paragraph 7 says the USD 2,50,000 limit "also includes/subsumes" remittances for the current account transactions under paragraph 1 of Schedule III to the Current Account Transactions Amendment Rules, 2015 dated May 26, 2015, namely private visit, gift or donation, going abroad on employment, emigration, maintenance of relatives abroad, business trip, medical treatment abroad and studies abroad. Release above USD 2,50,000 requires prior permission from the Reserve Bank. The sub-paragraphs set out the same limit for each purpose, with these points:
| Purpose | What the Master Direction says |
|---|---|
| Private visits (a) | Other than Nepal and Bhutan; aggregate of USD 2,50,000 in a financial year, irrespective of the number of visits; tour expenses are subsumed under the limit |
| Gift or donation (b) | Up to USD 2,50,000 in one FY to a person residing outside India or an organisation outside India |
| Employment abroad (c) | Up to USD 2,50,000 per FY |
| Emigration (d) | From the bank up to the amount prescribed by the country of emigration or USD 250,000; excess only for incidental expenses, not for earning points or credits for immigration |
| Maintenance of relatives (e) | Up to USD 2,50,000 per FY; relative as defined in section 2(77) of the Companies Act, 2013 |
| Business trip (f) | Up to USD 2,50,000 in a FY; expenses borne by the employer entity for a deputed employee are treated as residual current account transactions outside the Scheme |
| Medical treatment (g) | Up to USD 2,50,000 or equivalent per FY without an estimate; above that, on an estimate from a doctor or hospital; separate amount up to USD 250,000 for an attendant |
| Studies (h) | Up to USD 2,50,000 without an estimate from the university; above that, on the estimate from the institution abroad |
This is where the earlier Schedule III article and this Master Direction meet: the Rules print the limit and the provisos, and this paragraph tells the bank how to apply it.
Paragraphs 8 to 14: uses and restrictions
- Paragraph 8. Remittances may be used for purchasing objects of art, subject to other applicable laws such as the Foreign Trade Policy.
- Paragraph 9. Outward remittance by demand draft in the individual's own name or the beneficiary's name for permissible transactions during a private visit, against a self-declaration in the prescribed format.
- Paragraph 10. Individuals may open, maintain and hold foreign currency accounts with a bank outside India for remittances under the Scheme without prior approval of the Reserve Bank.
- Paragraph 11. Authorised persons may facilitate remittances to International Financial Services Centres in India for services under the IFSC Authority Act, 2019 and for transactions elsewhere through a foreign currency account in the IFSC. Residents shall not settle domestic transactions with other residents through those accounts.
- Paragraph 12. Banks should not extend credit to facilitate capital account remittances under the Scheme.
- Paragraph 13. The Scheme is not available for any purpose prohibited under Schedule I or restricted under Schedule II of the Current Account Transactions Rules; see the articles on Schedule I and Schedule II.
- Paragraph 14. The Scheme is not available for capital account remittances to countries identified by the Financial Action Task Force as non-co-operative, or as notified by the Reserve Bank, nor to individuals and entities identified as posing a significant risk of terrorism.
Paragraphs 15 to 19: documents, PAN, repatriation, loans and gifts
Paragraph 15. The individual designates a branch of an authorised dealer through which all remittances will be made and furnishes Form A2 for purchase of foreign exchange under the Scheme. Form A2 is not on the page consulted. Paragraph 16 makes it mandatory to provide PAN.
Paragraph 17. An investor can retain and reinvest income earned. The received, realised, unspent or unused foreign exchange, unless reinvested, shall be repatriated and surrendered to an authorised person within 180 days from the date of receipt, realisation, purchase, acquisition or return to India, as the case may be, in accordance with regulation 7 of the Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015. A resident who has made overseas direct investment must follow the overseas investment framework.
Paragraph 18 allows a resident individual to lend rupees to an NRI or PIO relative by crossed cheque or electronic transfer, on these conditions: the loan carries no interest and has a minimum maturity of one year; it is within the overall limit of USD 2,50,000 per financial year; it is for the borrower's personal requirements or own business in India; it is not used for activities in which investment by persons resident outside India is prohibited (the paragraph lists chit fund, Nidhi company, agricultural or plantation activities or real estate business or construction of farm houses, and trading in Transferable Development Rights, with an Explanation on real estate); the amount is credited to the borrower's NRO account; it is not remitted outside India; and repayment is by inward remittance through normal banking channels, or by debit to the borrower's NRO, NRE or FCNR account, or out of sale proceeds of the shares, securities or immovable property against which the loan was granted.
Paragraph 19 permits a rupee gift to an NRI or PIO relative by crossed cheque or electronic transfer, credited to the recipient's NRO account, within the overall limit of USD 250,000 per financial year. The resident donor must ensure that all remittances in the year, including the gift, stay within the limit.
Example
Priya, a resident individual in Jaipur, remits USD 1,50,000 to her daughter abroad for studies and lends the equivalent of USD 50,000 in rupees to her NRI brother under paragraph 18. Both count towards the limit of USD 2,50,000 for the year. If her brother's loan were used for a chit fund business, it would breach paragraph 18. If the loan carried an interest rate, it would not meet condition (i).
Common mistakes
- Treating the limit as per transaction. It is per financial year per individual.
- Forgetting that the loan or gift to an NRI relative also counts against the limit.
- Believing that a company may use the Scheme. Paragraph 1 excludes corporates, firms, HUF and trusts.
- Overlooking the 180-day repatriation requirement in paragraph 17.
Need help with a remittance under the Scheme?
If you are planning a large remittance, an overseas investment or a loan to an NRI relative, our FEMA advisory team can check each step against the Master Direction and the Rules. Tax on the remittance is a separate subject; see our income-tax guides, including TCS on foreign remittance under LRS.
Key takeaways
- The limit is USD 2,50,000 per financial year per resident individual, and it subsumes the Schedule III current account purposes.
- Corporates, partnership firms, HUF and trusts cannot use the Scheme.
- PAN is mandatory, and unused foreign exchange must be repatriated within 180 days unless reinvested.
- Rupee loan and rupee gift to an NRI or PIO relative are available within the same limit, with conditions.
- Section B of the Master Direction (paragraphs 1 to 13) tells banks how to check; see the travel cards and Form A2 article.
Read next
- Remittance limit for individuals: rule 5 and Schedule III
- Travel cards and Form A2: Master Direction - Other Remittance Facilities
- LRS: liberalised remittance scheme complete guide
- LRS: permitted and prohibited transactions
Disclaimer: Based on the rules, regulations and Reserve Bank Master Directions under the Foreign Exchange Management Act, 1999 that this article names, each in the version and up to the date stated in the article, as consulted on 2 October 2026. Some texts are third-party copies or older prints and are identified as such. Limits, forms and time limits change by amendment and circular; later changes should be checked on the Reserve Bank and Gazette sites. This article is general information, not legal advice; check the official text before acting.