On August 14, 2013 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.
The central bank capped the limit for Overseas Direct Investment (ODI) under the automatic route for all fresh transactions from 400 percent of the net worth of an Indian party to 100 percent. This reduced limit would also apply to remittances made under the ODI scheme by Indian Companies for setting up unincorporated entities outside India in the energy and natural resources sectors.
Under the scheme, all AD Category-I banks may now allow remittance of up to $75,000 per financial year for any permitted current or capital account transaction or a combination of both.
Additionally, the RBI has notified through the circular that the following changes/clarifications with regard to remittances under Liberalised Remittance Scheme (LRS) will come into immediate effect:
- The scheme shall no longer be used for the acquisition of immovable property, directly or indirectly, outside India. AD Category-I banks, therefore, not allow any remittances under the LRS Scheme for acquisition of immovable property outside India.
- The scheme shall not be used for making remittances for any prohibited or illegal activities such as margin trading, lottery etc.
- Resident individuals are now allowed to set up Joint Ventures (JV) / Wholly Owned Subsidiaries (WOS) outside India for the purpose of bonafide business activities outside India within the limit of $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.
Furthermore, the limit for monetary gifts and loans by Resident Individuals to close NRI relatives also stand modified at $75,000 per financial year.
Find the complete circular below;