The Reserve Bank’s Liberalised Remittance Scheme (LRS) now covers expenses incurred in foreign currency through payments made with international credit card. The Finance Ministry announced on Tuesday that expenses paid overseas using foreign credit cards are also being included in the LRS by notifying the Foreign Exchange Management (Current Account Transactions) Amendment Rules, 2023.
What is the highest price that can be accepted?
A person is permitted to send up to $2.5 lakh abroad per fiscal year under LSR, even without the Reserve Bank’s approval. Any remittance of foreign cash above $2.5 lakh will require RBI permission with the inclusion of LRS in this announcement.
Credit Card update – Previous payments were not protected by LSR.
Prior to this warning, LRS did not apply to foreign credit card payments made for costs incurred while traveling overseas. After consulting with the RBI, the Ministry of Finance decided to delete Section 7 of the Foreign Exchange Management Rules, 2000. As a result, LRS now applies to payments made using international credit cards processed outside of the country.
A permit will need to be obtained.
According to Shreya Puri, Partner at Induslaw, pre-approval for payments made overseas using an international credit card must only be obtained after the specified dollar amount has been exceeded. He stated, “We’ll have to observe how the industry responds to these developments.
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