LRS Explained: The $250k Outward Remittance Limit for Indian Founders

Under the Reserve Bank of India's Liberalised Remittance Scheme (LRS), a resident individual can remit up to USD 250,000 per financial year abroad for permitted purposes — including equity in a foreign company. That single cap is the budget every Indian founder works inside when setting up and funding a US entity. It resets every April, applies per person (not per transaction), and now carries a 20% tax-collected-at-source charge above a ₹10 lakh threshold that you can claim back later.

What is the LRS and who can use it?

The LRS lets every resident individual in India — including minors — send money abroad freely up to a yearly ceiling, without prior RBI approval.

It covers both current-account purposes (travel, education, gifts, maintenance of relatives) and capital-account purposes (buying shares, property, or setting up a wholly-owned subsidiary overseas). For a founder, the relevant bucket is capital account: subscribing to the share capital of your US company. The full rulebook lives in the RBI's Master Direction on the Liberalised Remittance Scheme.

The scheme is for individuals only — companies, partnerships, and HUFs cannot use it.

So if your Indian Pvt Ltd wants to fund a US subsidiary, that is a different route (overseas direct investment by an entity), not LRS. LRS is what *you*, the individual founder, use to put your own money into a foreign company you own.

How much can an Indian founder actually send abroad per year?

The hard ceiling is USD 250,000 per individual per financial year, and every outward remittance you make in that year — tuition, a family gift, a holiday booking, share capital — draws down the same USD 250,000.

There is no separate sub-limit for investment. If you sent USD 20,000 for a child's education in June, you have USD 230,000 left for everything else until the following April.

The number is per person, and that is the lever founders use most.

Two co-founders each have their own USD 250,000, so a two-person team can legitimately route up to USD 500,000 abroad in a single financial year — each from their own bank account, against their own LRS limit. This is why founding teams often split a larger initial capital contribution across personal accounts rather than trying to push it all through one person.

Does TCS make it more expensive to send money out?

TCS (tax collected at source) is a prepaid tax, not a fee — you get it back, so it changes your cash-flow timing, not your real cost.

As of FY 2025-26, the first ₹10 lakh of LRS remittances in a year carry no TCS. Above ₹10 lakh, non-education/non-medical remittances attract 20% TCS, which your bank collects at the time of transfer. The threshold was raised from ₹7 lakh to ₹10 lakh in the Union Budget 2025-26, per the Press Information Bureau.

The key word is *collected*, not *charged*.

That 20% shows up against your PAN and is adjusted against your income-tax liability — you claim it as a credit (or refund) when you file your return. So if you remit USD 100,000 to capitalize your US company, roughly ₹16-17 lakh gets parked with the tax department and comes back at filing time. Plan the working-capital gap; don't treat it as money lost.

How does the LRS limit affect setting up a US company?

For almost every bootstrapped founder, USD 250,000 is far more headroom than a US setup actually needs — formation and first-year upkeep are a rounding error against the cap.

A Wyoming LLC costs roughly $299–$399 all-in per year, and a Delaware C-Corp runs about $800–$1,500 all-in once you count the registered agent and CPA. Even funding six figures of US runway, you stay comfortably inside the limit.

Where the limit *does* bite is ongoing operations.

If your US company earns revenue, pays you, and you keep cycling money back and forth between India and the US through your personal LRS allowance, you can hit the ceiling faster than you'd expect. That is the moment to stop treating LRS as your money-movement rail and start using your *company's* banking and a compliant off-ramp instead. See how the two paths compare in our guide to opening a US bank account as a non-resident and the EIN without an SSN walkthrough.

Rule of thumb: use LRS to capitalize the company once; use the company's own rails to run it.

What about crypto, USDC, and the compliant way to move money?

Buying USDC or other stablecoins through a personal wallet to shift value out of (or into) India is the path that lives in a regulatory grey area — and it is exactly the path founders should avoid.

Two things stack up against the DIY route. India taxes virtual digital assets at a flat 30% under Section 115BBH with no loss set-off, and a 1% TDS applies on transfers under Section 194S. On top of that, a wallet-to-wallet move has no FEMA purpose code and no clean paper trail — which is what makes it grey.

The compliant version is a purpose-code-based off-ramp.

StableCorp provides compliant rails — not a grey-area workaround — by off-ramping USDC into INR against recognised RBI purpose codes (P0802, P1004, P1005, P1006, P1007, P1009), so every receipt has a proper paper trail. That distinction matters: LRS governs money going *out* of India; a purpose-code off-ramp governs money your US company pays *back* to you, cleanly. USDC itself stays a 1:1 USD claim issued by Circle, with reserves attested monthly.

On price, this is where the gap is real. StableCorp charges 1% on direct off-ramp to INR and 1% on payroll for contractors (sometimes volume-negotiated), versus a market that advertises ~2.9% headline but adds ~2% hidden FX markup — roughly 5% effective. For clients incorporated with StableCorp, the rate drops to 1.5% onramp / 0.5% offramp. See the full breakdown on our pricing page.

Putting it together: a founder's LRS playbook

Get the structure right once and the money movement stays simple for years.

StableCorp forms your Wyoming LLC or Delaware C-Corp, files your EIN, opens the US bank account, and gives you a compliant USDC-to-INR off-ramp on the other side — so your LRS limit funds the company and your company funds you. Compare it against doing it piecemeal on our pricing page.

This is general information, not legal, tax, or financial advice. LRS rules, TCS rates, and thresholds change — verify current guidance with the RBI and the Income Tax Department, or a qualified advisor, before remitting. Figures are current as of June 2026.

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