whether drawal of foreign exchange by resident Indian for remittance of gift $20000 to grand daughter(NRI) is allowed under LRS scheme of FEMA Act 1999?
07 July 2024
Under the Liberalized Remittance Scheme (LRS) of FEMA (Foreign Exchange Management Act) 1999, resident Indians are permitted to remit money abroad for specific purposes, including gifts. Here's how it applies to your query:
1. **LRS Limit**: Currently, resident individuals can remit up to USD 250,000 per financial year under the LRS scheme for various permissible current and capital account transactions, including gifting.
2. **Gifts**: Gifts to NRI relatives are considered a permissible use under the LRS scheme, subject to certain conditions: - The remittance can be made for gifting to a close relative (as defined in the Income Tax Act) who is an NRI (Non-Resident Indian). - The maximum limit per financial year per individual under the LRS scheme applies (USD 250,000). - The gift amount should comply with the norms and limits set under the scheme.
3. **Documentation**: For remittances under the LRS scheme, certain documentation may be required, such as a declaration form, KYC documents, and a purpose of remittance declaration.
Regarding your specific query about remitting $20,000 as a gift to your granddaughter (an NRI), this falls within the permissible limits of the LRS scheme, provided it adheres to the current annual limit of USD 250,000 and other regulatory requirements.
It's advisable to consult with a certified foreign exchange dealer or authorized bank dealing in foreign exchange transactions to ensure compliance with all relevant FEMA regulations and to facilitate the smooth processing of your remittance under the LRS scheme.
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