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LRS has set new rules and regulations on force to ensure all the cash being sent abroad strictly follow the tax guidelines within a prescribed limit. If you are planning on investing in properties, shares in different countries or even sending cash to your kid studying abroad, you need to have a PAN card to be able to do so. You can’t exceed a set limit for sending money on an annual basis. This new move by the government is to assure that the cash being transferred to a different country is regularized in terms of tax. The move shall also ensure that the sender adheres to the limit prescribed under the new regulation.
The rules listed by RBI (Reserve Bank of India) have been tightened recently in terms of remitting money to another country with regards to LRS or Liberalized Remittance Scheme. Under the scheme, PAN card has been listed as a mandatory inclusion for anyone opting to send cash to any other country. Before the inclusion of this new rule, PAN wasn’t necessary for transactions made via current account till a limit of $25,000.
LRS is a scheme that is used by Indian residents to invest in international properties and stocks or sending money to children studying in other countries. LRS was introduced in the year 2004. A major faction of Indian parents uses this scheme to send money to their children for school/college fees or help with the expenses for living abroad.
For Indian residents interested in the stock market, LRS is an efficient scheme to help them buy some stocks in high-ranking foreign companies as per their interest which might include names such as Apple, Google, Amazon, etc. Apart from investing in stocks, people can also buy properties in the foreign land. LRS allows you the right to send or invest money to any one in any country.
PAN card was made mandatory this year by Central Bank for all the transactions, given the fact that during the month of January, many Indian Businessmen along with Bollywood celebrities and diamond merchants invested in funds abroad by betting on various stocks, properties which breached the limit specified under the LRS scheme.
The rule under LRS allows the Indian individuals to purchase stocks or properties abroad. However, it was being used to invest in speculative bets over instruments that include derivatives. The annual limit for LRS after making PAN card mandatory has been increased from the prior $1,25,000 to the updated $2,50,000.
