Knowledge Base

The Liberalised Remittance Scheme (LRS) is a regulatory framework established by the Reserve Bank of India (RBI) that allows resident Indians to remit a certain amount of money abroad for permitted purposes. It is the essential route through which Indian investors can legally buy and hold stocks listed on international exchanges like the NYSE and NASDAQ.

1. Annual Investment Limit

• Limit: Resident individuals can remit up to USD 2,50,000 per financial year (April to March).
• Cumulative: This limit is cumulative across all overseas expenditures, including international travel, education, gifts, medical treatment, and investments.
• Reset: The limit resets every year on April 1st; unused limits do not carry forward.

2. Eligibility

• Who can invest: Any Indian resident aged 18 or above with a valid PAN card.
• Exclusions: NRIs are not covered under the LRS framework. Additionally, companies, HUFs, and partnership firms are currently not eligible to invest in US stocks through this route at Samco.

3. Permitted vs. Prohibited Activities

Under LRS guidelines, there are strict rules regarding what investors can do:

• Permitted: Buying individual US stocks, purchasing US ETFs (like SPY or QQQ), and holding fractional shares.
• Prohibited: Intraday trading (buying and selling the same stock on the same day), trading in Futures & Options (F&O), using margin or leverage, and short selling are all strictly prohibited.