LRS for Global Investments: Stocks, ETFs, Real Estate & More

For Indian investors, global investing has become an essential part of long-term portfolio planning. With children studying overseas, families diversifying wealth, and markets becoming more interconnected, the need to allocate capital abroad is only growing.

The Reserve Bank of India’s Liberalised Remittance Scheme (LRS) provides the framework that makes this possible. Under LRS, every resident individual can remit up to USD 250,000 per financial year for investments and other permitted purposes. These remittances are processed through authorised dealer banks, reported to the RBI, and tracked against each individual’s PAN.

This guide explains how LRS works in the context of investments.

Table of Contents

• What is LRS
• Direct Equities, ETFs, and Global Funds
  • US & Global Stocks
  • Exchange-Traded Funds (ETFs)
  • American Depository Receipts (ADRs)
  • UCITS Funds
• Bonds & Debt Instruments
• Real Estate Abroad
• Foreign Currency Deposits
• Venture Capital and Private Equity
• What is Not Allowed under LRS (for Investments)
• How to Send Money Abroad for Investments under LRS
• TCS on Overseas Investments
• Taxation of Investment Income
• Estate Tax Risks for Indians
• FAQs
• Conclusion

What is LRS?

The Liberalised Remittance Scheme (LRS) is the framework created by the Reserve Bank of India that allows resident Indians to legally send money abroad.

• Every resident individual (including minors) can remit up to USD 250,000 per financial year (April–March) for permitted purposes such as investments, education, medical treatment, or travel.
• All outward remittances are processed through authorised dealer banks and reported to the RBI, which tracks them against your PAN.
• Once your total outward remittances cross ₹10 lakh in a financial year, Tax Collected at Source (TCS) rules apply. For investment-related remittances, the current rate is 20% on the amount exceeding ₹10 lakh, which can later be claimed as a credit in your ITR.

Direct Equities, ETFs, and Global Funds

For most Indian investors, the natural starting point for global investing is the United States. Under LRS, you can access multiple instruments to participate in international markets. Each option has its own tax, compliance, and estate planning implications.

Here are the main routes available:

1) Direct Equities (US & Global Stocks)

You can buy individual shares of companies listed overseas, most commonly in the US. This includes blue chips like Apple, Microsoft, or Google.

For diversification, you can also access stocks listed in other markets (Japan, China, Switzerland, Ireland) through global brokers.

We’ve created detailed guides on investing in each of these markets from India:

• Invest in US from India
• Invest in Japan from India
• Invest in Switzerland from India
• Invest in China from India
• Invest in Ireland from India

2) Exchange-Traded Funds (ETFs)

ETFs allow you to gain diversified exposure in a single trade. Under LRS, Indians can buy US-listed ETFs (like SPY, QQQ, VOO) or Europe-domiciled UCITS ETFs (like VUAA, CSPX). Each has pros and cons: US ETFs are liquid but expose you to US estate tax, while UCITS ETFs are built for non-US investors and are often more tax-efficient.

3) American Depository Receipts (ADRs)

ADRs let you invest in non-US companies (like Toyota, Samsung, or Alibaba) through instruments listed on US exchanges. They’re convenient for India-based investors who want global exposure without setting up multiple market accounts.

4) UCITS Funds (Ireland, Luxembourg, Switzerland)

These funds are popular with global investors outside the US. They come in both index-tracking and actively managed formats. For Indian investors, the big advantage is that they typically avoid US estate tax risk, have favourable tax treaties, and can be accumulating (reinvest dividends) or distributing (payout dividends).

We have published a dedicated guide on why Indian investors should choose UCITS over the US ETFs and how it can help them save up to 40% estate tax. 

Bonds & Debt Instruments

Many HNIs and family offices use their LRS limit to allocate capital into fixed-income products abroad. Options include:

Real Estate Abroad under LRS

Buying property overseas is one of the most common goals for Indian families making use of their LRS limit. RBI permits acquisition of immovable property abroad under FEMA, but the process involves strict documentation, specific purpose codes, and clarity on tax treatment. It’s particularly popular for families whose children are studying or settling overseas, or for HNIs looking to diversify assets geographically.

Here are the key considerations and common questions, structured for clarity:

What Types of Properties Can You Buy?

• Residential Property: Apartments, villas, or homes for self-use, children studying abroad, or for rental income.
• Commercial Property: Offices, retail space, or warehouses abroad.
• Restrictions:
  • Agricultural land, plantations, and farmhouses are generally not permitted.
  • RBI only allows acquisition of immovable property for “bona fide” purposes, not speculative flipping.

Can Families Pool Limits?

• Each resident individual can remit USD 250,000 per financial year.
• Pooling is permitted: For example, both parents can combine their limits to remit USD 500,000 in a year toward the purchase. Adult children can add their own limits too.
• If the property value exceeds the pooled remittance, banks may allow phased payments across financial years.

Foreign Currency Deposits under LRS

Apart from equities, ETFs, and real estate, LRS also allows resident Indians to open and maintain foreign currency accounts abroad. This route is less about investment returns and more about convenience, diversification, and currency exposure. 

For HNIs, it can be a useful tool for managing international expenses or funding future overseas investments.

Here’s a detailed breakdown:

What Are Foreign Currency Deposits?

• Accounts maintained in banks outside India, denominated in USD, GBP, EUR, CHF, JPY, etc.
• Typically used as savings accounts, term deposits, or custodial cash accounts linked to a brokerage.
• Purpose: Holding funds abroad for future investments, education, travel, or expenses in that currency

Compliance Rules

• Permissibility: RBI permits residents to open foreign bank accounts under LRS.
• Annual Limit: Remittances count toward the USD 250,000 LRS cap.
• Documentation:
  • Form A2 with purpose code (S0007 – Remittance for opening foreign currency account).
  • PAN, passport, KYC.
  • Declaration of source of funds.
• Restrictions: Accounts must not be used for margin trading, crypto transactions, or unlawful remittances.

Venture Capital and Private Equity under LRS

For many Indian HNIs and family offices, venture capital (VC) and private equity (PE) are the next step after listed equities. 

Under the Liberalised Remittance Scheme, it is possible to allocate part of your USD 250,000 limit into offshore VC and PE funds. But unlike buying US stocks or ETFs, these investments are subject to RBI’s Overseas Investment Rules (2022) and require a higher bar of compliance.

What Counts as VC/PE Investment Abroad?

• Venture Capital Funds: Pools investing in early-stage startups abroad. Typically domiciled in the US, Singapore, or Europe.
• Private Equity Funds: Investments into growth-stage or buyout opportunities, often with 7–10 year lock-in structures.
• Alternative Investment Vehicles: Hedge funds, private credit funds, and feeder structures that route money into global VC/PE.

What is Not Allowed under LRS (for Investments)

While LRS gives you flexibility to invest globally, there are clear restrictions on what Indian residents cannot use their LRS limit for. Knowing these boundaries helps avoid compliance issues, remittance rejections, or even tax penalties.

Explicitly Prohibited

• Cryptocurrency: RBI has not recognised crypto as a permissible investment class. Most banks will reject remittances if the purpose is crypto trading or wallets.
• Margin Trading and Leveraged Products: Using LRS for leveraged trades, CFDs (contracts for difference), or margin accounts abroad is not allowed. Even if your broker platform offers these features by default, Indian investors cannot activate or use them.
• Speculative Derivatives: Options, futures, or exotic derivative contracts for speculative purposes fall outside permitted LRS use.
• Lottery or Gambling-Linked Instruments: Any products linked to betting, gambling, or lottery systems are explicitly barred under FEMA.

Grey Areas

Some products sit in an ambiguous space where banks may interpret rules differently:

• Structured Notes: Yield-enhanced debt products linked to equities or FX. Some banks treat these as derivatives and refuse remittances.
• Feeder Funds in Tax Havens: Offshore funds domiciled in tax-friendly jurisdictions (like Cayman) may face extra scrutiny.
• Pre-IPO Shares in Foreign Private Companies: Direct allocations can blur the line between portfolio investment and ODI (Overseas Direct Investment), triggering compliance concerns.

Common Mistakes to Avoid

• Using Wrong Purpose Codes: Marking remittances for “education” or “travel” when actually investing. Banks and regulators cross-check, and mismatches can raise red flags.I think this is how we should draft this. We have mentioned direct equities ETFs, ADRs, use it funds, bonds, real estate etc. So I think we should tell for each what could be a better way in a tabular manner. For example, if you want to buy real estate, you can transfer to your US bank account.
• Routing Money via Personal Foreign Accounts: Sending money abroad under one purpose, then moving it into restricted assets. This violates the spirit of LRS and can attract penalties.
• Assuming “If the platform offers it, it must be legal”: Many global brokers allow products Indians cannot use under LRS. Always check RBI’s permitted list before activating features.

How to Send Money Abroad for Investments under LRS

Different types of investments under LRS require slightly different remittance routes. Here’s a quick guide on how to actually transfer funds for each category.

TCS on Overseas Investments under LRS (as of FY 2025–26)

TCS is not an extra cost, it is an advance tax that you can adjust while filing your Income Tax Return (ITR).

• Threshold: No TCS applies on total LRS remittances up to ₹10 lakh per PAN per financial year.
• Investments and all other general LRS purposes (gifts, property, deposits, funds):
  • 0% TCS up to ₹10 lakh.
  • 20% TCS on the amount exceeding ₹10 lakh.
• For Education and Medical Treatment, TCS rules are different, we’ve explained them in detail in our dedicated guides on LRS for Education and LRS for Medical Treatment.

Example (for investments):

If you remit ₹20 lakh in a financial year for overseas investments:

• First ₹10 lakh → no TCS.
• Remaining ₹10 lakh → 20% TCS = ₹2,00,000.

This TCS is not an extra tax; you can claim it as a credit when filing your ITR.

Taxation of Investment Income

Taxation on overseas investments is highly complex. It varies both by instrument (equities, ETFs, UCITS, bonds, real estate, private equity) and by jurisdiction, since India has different tax treaties with different countries.

If you’re exploring global investments, it’s best not to rely on generic assumptions. 

The rules for withholding tax, capital gains, and claiming Foreign Tax Credit (FTC) are not uniform, what applies to a US-listed ETF may be very different from a UCITS fund in Ireland or a property in the UK.

In such cases, it’s best to consult experts who can interpret the rules correctly for your specific portfolio and goals. Our team at Paasa has in-depth experience working with HNIs, family offices, and global portfolios, and can help you navigate these complexities with confidence. If you’d like, you can also reach out to us.

Estate Tax Risks for Indians Investing Abroad

Estate and inheritance taxes are often overlooked when Indians invest overseas, but they can have a significant impact on how much wealth actually passes on to heirs. The challenge is that rules vary by country and by asset class, what applies to US equities is not the same as UK property or European funds.

• In the United States, non-residents get only a USD 60,000 exemption. Beyond this, estate tax can be as high as 40% on US assets like stocks, ETFs, ADRs, and real estate.
• In the United Kingdom, inheritance tax is generally 40% above GBP 325,000, and covers UK property as well as certain financial assets.
• In parts of Europe, estate taxes differ, some are based on the investor’s residency, others on where the asset is located.

Because of these variations, estate planning becomes critical.

Mitigating Estate Tax Risk

• UCITS ETFs: Europe-domiciled funds that give exposure to US equities and other markets, but are not treated as US-situs assets. For Indian investors, they are often more estate-tax efficient than US ETFs.
• Jurisdiction Selection: Funds domiciled in Ireland, Luxembourg, or Switzerland often help avoid unnecessary estate tax exposure.
• Structuring Options: Family trusts or offshore entities can be used in some cases, though these add complexity and cost.

Optimising for estate tax is therefore not a one-size-fits-all exercise. The safest approach is to consult experts who can tailor the strategy to your situation. Our team at Paasa has experience working with HNIs, family offices, and global portfolios, and you can reach out to us if you’d like help navigating this.

FAQs

Can minors use the LRS limit?
Yes, minors are also eligible for the USD 250,000 limit, though transactions must be executed by their guardian.

Can a family pool limits for bigger investments?
Yes. Each family member can use their own USD 250,000 limit. Parents, children, and even grandparents can pool their limits for property or larger fund allocations.

What is the TCS rate on investments under LRS?
For investments, 20% TCS applies on the amount exceeding ₹10 lakh in a financial year. This can be claimed back while filing ITR.

Can I invest in US stocks under LRS?
Yes. Direct equities in the US are permitted. Most Indian investors start with US-listed companies like Apple, Google, or Microsoft through global brokers like Paasa.

Can I buy real estate abroad using LRS?
Yes. Residential or commercial property abroad is allowed. Agricultural land, plantations, and farmhouses are not permitted.

Can I open a foreign bank account under LRS?
Yes. You can open and maintain a foreign currency account abroad, but it cannot be used for prohibited transactions like margin trading or crypto.

What about estate tax on US assets?
Non-resident Indians get only a USD 60,000 exemption on US-situs assets. Above this, estate tax can apply up to 40%. UCITS ETFs are often used to reduce this risk.

Is it better to consult experts before investing under LRS?
Yes. Taxation and compliance vary by instrument and jurisdiction. Consulting experts ensures your investments are structured efficiently and remain compliant.

Conclusion

The real challenge is not sending money abroad, but doing it the right way: choosing the right instruments, selecting the right jurisdictions, and keeping your portfolio both efficient and compliant. Which is why it’s best to consult experts who can guide you through these layers with clarity.

At Paasa, we’ve worked with HNIs, family offices, and globally invested portfolios, helping them balance opportunity with compliance. If you’re exploring investments abroad and want to understand how to structure it best, you can always reach out to us for guidance.

About Paasa

Paasa is an Indian investor’s gateway to global markets, trusted by HNIs, family offices, and institutions to diversify across the US, Europe, China, Japan, and beyond.

What makes Paasa different is the India-facing layer we bring on top of global brokerage infrastructure:

• FEMA and LRS compliance built into every transaction
• Tax reporting and analytics tailored for Indian investors (LTCG, STCG, dividend tax, TCS tracking)
• End-to-end support for remittance, reconciliation, and compliance queries

While Paasa is built as an investment platform, our team also works closely with clients on broader remittance needs, whether it is healthcare, education, or large-scale global allocations. If you need clarity on how LRS applies to your situation, our experts are here to help you navigate it with confidence.

Disclaimer

This blog is intended for informational purposes only and should not be considered investment, tax, or legal advice. The details provided are based on publicly available regulations and our understanding of the Liberalised Remittance Scheme (LRS) at the time of publication. RBI guidelines, tax laws, and other regulatory frameworks are subject to change, and their application can vary depending on individual circumstances.

Investing abroad under LRS involves risks, including foreign exchange volatility, regulatory changes, and jurisdiction-specific tax implications. Readers should consult qualified financial, tax, and legal professionals before making any remittance or investment decisions.

Paasa does not accept responsibility for decisions made solely on the basis of this content.