Today RBI had announced in its circular that forex Remittance limit for Residential individuals has been reduced from USD 200,000 to USD 75,000 per financial year with immediate effect.
Key notes from the RBI Circulars
1)Liberealised Remittance Scheme should not be used for making remittances for any prohibited or illegal activities such as margin trading, lottery etc
2)The scheme should no longer be used for acquisition of Real Estate, directly or indirectly, outside India. Therefore, AD Category-I banks may henceforth not allow any remittances under the LRS Scheme for acquisition of immovable property outside India.
3)Resident individuals have now been allowed to set up Joint Ventures (JV) / Wholly Owned Subsidiaries (WOS) outside India for bonafide business activities outside India within the limit of USD 75,000 with effect from August 5, 2013 and subject to the terms and conditions stipulated in Notification No.FEMA 263/RB-2013 dated August 5, 2013.
The RBI press release said that “this reduced limit would also apply to remittances made under the ODI (overseas direct investment) scheme by Indian companies for setting up unincorporated entities outside India in the energy and natural resources sectors. This reduction in limit, however, would not apply to ODI by Navratna PSUs, ONGC Videsh Ltd and Oil India in overseas unincorporated entities and incorporated entities, in the oil sector.”
While the measures are aimed at moderating outflows, the RBI added that genuine requirement beyond these limits will continue to be considered under the approval route
Reference to RBI Circular