RBI Forex Regulations Every Indian Traveler Should Know

Navigating RBI forex regulations can be daunting, but understanding these rules is essential for every Indian traveler and anyone dealing in foreign exchange. Here is a clear breakdown of what you need to know.

Liberalised Remittance Scheme (LRS)

Under the LRS, resident Indians can remit up to USD 2,50,000 per financial year for permitted current and capital account transactions. This includes travel, education, medical treatment abroad, gifts, donations, and investments. The limit resets every April 1st, and any unused amount cannot be carried forward to the next financial year.

Tax Collection at Source (TCS)

As per the latest regulations, TCS of 5% applies on forex remittances exceeding Rs 7 lakh in a financial year under LRS. For education purposes funded by a loan, the TCS rate is 0.5% above Rs 7 lakh. For overseas tour packages, TCS of 5% applies from the first rupee if the total exceeds Rs 7 lakh. This TCS can be claimed as a credit when filing your income tax return.

Documentation Requirements

For purchasing foreign currency, you need a valid passport, confirmed air ticket, and visa (where applicable). For amounts exceeding USD 25,000, Form A2 declaration is required. Students going abroad need admission letters and fee receipts. Business travelers need a letter from their employer confirming the purpose of travel.

Forex Card Regulations

Forex cards issued in India must comply with RBI guidelines. Cards can be loaded with multiple currencies, and the total value across all forex instruments (cash, cards, traveler's cheques) must not exceed the LRS limit. Unused forex on cards can be retained for up to 180 days after return, after which it must be surrendered to an authorized dealer.

Prohibited and Restricted Transactions

Some forex transactions are prohibited under FEMA, including remittances for lottery winnings, trading in foreign exchange on unauthorized platforms, and capital account transactions without specific RBI approval. Always ensure your forex transactions are conducted through RBI-authorized dealers like Nimo.

Staying Compliant

Keep all forex transaction receipts and encashment certificates. Declare any foreign currency exceeding USD 5,000 (or equivalent) at customs when returning to India. Using an RBI-licensed forex provider like Nimo ensures all your transactions are fully compliant with regulations.