The 2025 Union Budget has unleashed a wave of excitement for Indian investors eyeing global opportunities. In a groundbreaking move, the Liberalised Remittance Scheme (LRS) limit has been increased from ₹7 lakhs to ₹10 lakhs, accompanied by the elimination of Tax Collected at Source (TCS) on US stock investments up to the new threshold. This change is a game-changer for investors seeking to diversify their portfolios abroad. Let’s dive into what this means for you!
What is the Liberalised Remittance Scheme (LRS)?
The LRS allows Indian residents to remit up to $250,000 (approx. ₹1.8 crores) annually for overseas investments, education, travel, and other permissible expenses. Until now, remittances beyond ₹7 lakhs attracted a 20% TCS on the taxable amount. But the 2025 Budget has rewritten the rules!
Key Changes in the 2025 Budget: LRS Limit Increased to 10 Lakhs
Before the 2025 Budget
- Threshold Limit: ₹7 lakhs
- Taxable Amount: ₹3 lakhs (for remittances up to ₹10 lakhs)
- TCS Rate: 20%
- Tax Collected: ₹60,000
- Net Amount Received: ₹9.4 lakhs
Investors lost a significant chunk to TCS, making overseas investments less appealing.
After the 2025 Budget
- Threshold Limit: ₹10 lakhs
- Taxable Amount: ₹0
- TCS Rate: 0%
- Net Amount Received: ₹10 lakhs
The result? You retain the full ₹10 lakhs for investments, saving ₹60,000 instantly!
Why the LRS Limit Increase is a Win for Indian Investors
- Boosted Savings: No TCS means more capital for US stocks, ETFs, or global mutual funds.
- Simplified Compliance: Eliminating TCS reduces paperwork and delays.
- Diversification Made Easy: Invest in giants like Apple, Tesla, or Amazon without tax hurdles.
Example: If you invested ₹10 lakhs in US stocks earlier, you’d only deploy ₹9.4 lakhs. Now, you invest the full amount, potentially earning 6.4% higher returns (assuming a 10% annual return).
How to Leverage the New LRS Limit for US Stock Investments
- Choose a SEBI-Registered Platform: Use platforms like Zerodha International or Groww to invest in US equities.
- Diversify Smartly: Allocate funds across sectors (tech, healthcare, renewable energy) to mitigate risk.
- Stay Updated: Track forex rates and global market trends.
Pro Tip: Combine this with tax-saving instruments like ELSS for a balanced portfolio. Learn more about tax-saving investments here.
External Resources to Maximize Your LRS Benefits
- RBI’s LRS Guidelines: Official RBI FEMA Page
- US Stock Market Insights: Investopedia Guide
Frequently Asked Questions (FAQs)
Q: Does the $250,000 LRS cap still apply?
Yes, the $250,000 annual limit remains. The ₹10 lakhs threshold only exempts TCS for smaller remittances.
Q: Are education and medical expenses covered under the new limit?
Yes! The TCS exemption applies to all LRS categories, including education and healthcare.
Conclusion: Seize the Opportunity!
The LRS limit increased to 10 lakhs is a golden ticket for Indian investors. With zero TCS draining your capital, you can confidently explore global markets and diversify your wealth. Whether you’re a seasoned investor or a beginner, now is the time to act.
Ready to start? Check out our guide on NRI Banking Tips for more insights!
Disclaimer: This article is for informational purposes only. Consult a financial advisor before investing.
