In a recent development, the Reserve Bank of India (RBI) has expanded the scope of the Liberalized Remittance
Scheme (LRS) to include expense incurred in foreign currency through international credit card payments.
The Ministry of Finance has issued the Foreign Exchange Management (Current Account Transactions) Amendment Rules, 2023, announcing this inclusion.
What is the Maximum Amount Allowed?
Under the LRS, individuals can now send a maximum of $2.5 lakh abroad in a financial year without seeking prior permission from the RBI.
However, any remittance exceeding this amount will require approval from the Reserve Bank.
Coverage of Payments Previously Not Included
Before this notification, expenses made through international credit cards while traveling abroad were not covered under the LRS.
In consultation with the RBI, the Ministry of Finance has removed section seven of the Foreign Exchange Management Rules, 2000, bringing international credit card payments within the purview of the LRS.
Prior Permission for Exceeding the Monetary Limit
Shreya Puri, Partner at Induslaw, highlighted that obtaining prior permission for making payments abroad through international credit cards
will only be necessary when the prescribed monetary limit has been surpassed. “We will need to observe how the industry responds to these changes,” Puri stated.
