Funding a golden visa from India under the LRS limit

The rule in one line

Under the Reserve Bank of India's Liberalised Remittance Scheme (LRS), every resident individual — minors included — can send up to USD 250,000 abroad per financial year (April to March) for permitted current or capital account purposes, or a mix of both.

The limit is cumulative. Everything you send in the year counts towards it — a child's tuition, a holiday, an overseas share purchase and the golden-visa investment all come out of the same USD 250,000. Once you have used it, you cannot remit more under the scheme until the next financial year.

Count what you have already sent this financial year before you count what you can send for the investment.

Can family members combine their limits?

Sometimes, and the difference matters. The RBI's own answer is that remittances can be consolidated for family members, provided each family member complies with the scheme's terms individually.

But for capital account transactions such as an investment or opening an overseas bank account, clubbing is not permitted for family members who are not co-owners of that investment or account. So a fund subscription made in one person's name can only be funded from that person's limit; to use a spouse's limit as well, the spouse has to be a co-owner.

Buying immovable property abroad is treated differently: remittances to buy property from a person resident outside India can be consolidated across relatives, as long as each of them is resident in India and complies with the scheme.

What that means for the main golden-visa routes

Most European golden-visa thresholds are expressed in euros and sit above one person's yearly limit, so a single applicant usually needs either co-investing family members or two financial years to fund them. The UAE's property route — AED 2,000,000 — is about USD 545,000 at the dirham's fixed peg to the dollar, which is more than two people's yearly limit.

That is why the order of steps matters. Fix the remittance plan — who remits, in whose name the investment or property sits, across how many financial years — before you sign a purchase agreement or a fund subscription with a deadline. The programme's own deadline does not move because your remittance plan was not ready.

Decide who will own the investment before you decide how to fund it. Ownership decides whose LRS limits you can use.

The paperwork your bank will ask for

A PAN is mandatory for every LRS remittance. You declare the purpose on Form A2, and the bank (the Authorised Dealer) certifies the remittance against it — but the RBI is clear that responsibility for complying with FEMA stays with you, the remitter.

For capital account remittances you designate one bank branch to route them through, and the RBI expects you to have held the account with that bank for at least a year. If you are a new customer, the bank does extra due diligence and will ask for the previous year's bank statement or tax return to see where the money came from.

That source-of-funds trail is the same one the destination country will ask to see. Assemble it once, properly, and it serves both.

Tax collected at source

Banks collect tax at source (TCS) on LRS remittances above a yearly threshold, at rates that are set — and have been changed — in Union Budgets. TCS is normally credited against your income tax for the year, but it is cash you part with at the moment you remit.

Check the current threshold and rate with your bank or chartered accountant in the month you plan to remit, and budget for it. It is one of the most common reasons a remittance falls short of the amount the investment needs.

Common questions