While studying abroad, Indian students or their parents would have to transfer money abroad to pay university tuition fees and maintenance costs abroad.
In such a scenario, it is natural to have doubts about the RBI rules for remittances abroad in India. This post talks about the relevant RBI rules and also how much money can parents send to their kids abroad
Outward Remittance comes under the Reserve Bank of India’s Liberalized Remittance Scheme (LRS). The LRS specifies rules and limits regarding remittances outside India for education purposes.
The maximum amount you can send abroad from India
Under the Liberalized Remittance Scheme, authorized dealers can allow Remittance of up to USD 2,50,000 to resident individuals per financial year for permitted current account/capital account transactions or both. LRS Scheme does not apply to Corporations, Partnerships, Firms, Trusts, HUFs, etc.
What does this mean for students?
The maximum payment limit for a student (including minor students) studying/going to study abroad is $2,50,000 per financial year. This limit covers the purposes of;
- Education abroad
- Medical expenses abroad
- Living expenses of a student studying abroad
- Gift transfer
- The limit of USD 2,50,000 can be used in a single forex transaction or multiple forex transactions combined during a financial year.
Note: If the sender is a minor, their natural guardian must sign the LRS Declaration Form (Form A2).
Special circumstances where you can send more money than the maximum limit
In special circumstances, you can withdraw more foreign exchange than the LRS limit of $2,50,000.
1. For the purpose of medical treatment abroad
For the amount in excess of the LRS limit, authorized dealers can release foreign exchange under general permission based on the estimate of a doctor in India or a hospital/doctor abroad.
2. For the purpose of studying abroad
Bank AD Category I and AD Category II may allow transfers (without prior approval of the Reserve Bank of India) over USD 2,50,000 based on estimates received from the University/Institution abroad.
What does this mean for students?
For overseas study and medical expenses that exceed the LRS limit, an individual may be allowed to use more foreign exchange than their US$2,50,000 limit if they provide the required documentation.
Medical Expenses Abroad – Estimate from a doctor in India or a hospital/doctor abroad. Study Abroad – Estimate from university/institution for tuition fees (and/or maintenance costs).
Additional read: How to fund child education in Ireland?
The maximum amount of money that can be carried as cash for foreign travel
Resident Indians traveling abroad from India can purchase foreign currency notes/coins only up to USD 3000 per visit. The remaining amount can be carried in the form of stored value cards, traveler’s checks, or bank drafts.
What does this mean for students?
An Indian student going to study abroad should carry foreign money in the form of cash only up to USD 3000 (or equivalent in other currency).
Cash means carrying money as notes/coins.
According to today’s US dollar exchange rate in India, USD 3000 is more than Rs 2,20,000. That’s enough money to take care of a student’s immediate expenses when moving abroad.
A student’s remaining forex limit ($ 2,50,000 – $ 3,000 = $ 2,47,000) can be carried on a forex card, traveler’s check, or bank draft.
How to transfer money abroad from India under LRS
- Select an RBI-authorized bank or exchange through which you want to send money abroad. Choose the one that offers the best exchange rate.
- The bank account from which you make the transfer should be maintained for at least one year before the transfer. In the case of a newly opened account, bank statements for the previous year, copies of the last assessed income tax order, or filed tax returns must be submitted.
- Send the A2 form with the reason for your payment.
- Submit required KYC documents
- A copy of the sender’s passport
- Copy of PAN card
- Copy of recipient’s passport (if required)
- Proof of relationship (if required)
