Tue06192018

Last updateSat, 16 Jun 2018 7am

Back You are here: Home Forex Planning to send money abroad? Get your PAN Card

Planning to send money abroad? Get your PAN Card

Did you know that Reserve Bank of India (RBI) recently changed the rules for sending money abroad under Liberalized Remittance Scheme! 

What’s the change?

RBI had made PAN Card compulsory for send money abroad from India under the Liberalized Remittance Scheme (LRS). If you want to remit money from India, you must have a PAN Card.

Earlier a person could send up to $25,000 without having a PAN Card. But with the announcement of the RBI’s latest policy changes, it is mandatory to submit the PAN Card details irrespective of the amount to be remitted.  

Demystifying LRS 

The Liberalized Remittance Scheme (LRS) was introduced by RBI in 2004 for all the resident individuals to send money abroad for easier transactions. It opens an avenue for many, especially for education, travel, medical treatments, gifting, donations etc. Individuals can maintain and hold foreign currencies with banks to make transactions. But now, RBI has tightened the rules for sending money abroad by making PAN details mandatory for all transactions done through LRS. This new rule is implemented with an objective to prevent individuals from sending unaccounted money to foreign lands. 

RBI has increased the limit under LRS to $250,000 per person, per financial year. LRS Scheme specifies certain restrictions for transactions.

It is frequently used by Indians who send money abroad for the purpose of their child’s education, holidays abroad, business visits abroad or medical purposes. Send money abroad is under great scrutiny by the government than inward remittance. Thus with the purpose to eliminate the out flow of black money, RBI has stiffened its rule for send money abroad through LRS by making PAN card mandatory for everyone. 

What’s the impact?

Latest amendment in Reserve Bank of India policies has effected Liberalized Remittance Scheme (LRS) to a great extent. PAN has become mandatory thereby stabilizing the financial system from all forms of unscrupulous outflow of funds. Even the tour operators using LRS scheme for payments should mandatorily submit Passport and PAN card of each individual passenger for send money abroad. These services were exclusively enabled with the fair thought of student’s education. But various instances of wrong financial investment practices that were recorded making the regulatory take up the step to bring things under control. Now money sent abroad should be placed with PAN card details making it easier for Bank and NBFCs to have everything accounted for each individual. Government can also have a check of the money that is flowing out and also about its sender, receiver and its purposes. It is a big step towards providing a contending data lock and a systemized safeguarding from all devious misuses.

5 outward remittance guidelines for you

The total remittance amount under LRS is $250,000. Though in case of additional financial requirements for the purposes of:

(i)   Study Abroad 

(ii) Medical Expenses Abroad 

(iii) Maintenance of a Close Relative Abroad

The LRS limit can be surpassed with the approval of RBI on submission of official papers proving the need for extra monetary requirements.

A quick guide on outward remittance:

1.All outward remittances made as gifts or donations are included in the purview of LRS and cannot be accounted for as a single remittance.

2.For expenditures related to education (studies abroad), a person may be allowed to avail further than their limit of $250,000 under LRS if it is so essential by the university or       institute providing the course.

3.If a person sends an amount under LRS in a fiscal year, then the updated limit for that individual would be lowered from the $250,000 limit by the amount sent.

4.For the purpose of travel, a student may be permitted to buy and carry foreign currency notes/coins only up to $3000, and the balance can be either remitted or carried using  Prepaid Instruments.

5.In case of the remitter being a minor, the minor’s natural custodian must sign the LRS declaration form.

What all things are necessary for remitting money under LRS?

•Submission of a self-declaration form showing the intention of your remittance.

•It is mandatory to provide PAN card to make remittances under the scheme.

•A bank/AD2 Category Foreign Exchange trader must be chosen for remittances.

Send money abroad is of vital importance today. Its demand has grown over years and still counting. Thus it’s necessary for us to get update frequently because the norms and conditions for send money abroad changes over nights. It implies that, the procedure you followed yesterday to remit money abroad is not applicable today!

 

 

Add comment


Security code
Refresh