Using the LRS to Buy Property Abroad: A Practical Guide for Indian Buyers

Every Indian buying property abroad runs into the same gateway: the Liberalised Remittance Scheme, or LRS.

It is the RBI framework that governs how much money you can legally send out of India and for what purposes. Understanding it is not optional — it is the legal channel through which an overseas property purchase has to flow.

This guide covers the practical mechanics: the limit, the tax that applies, how to handle a purchase larger than the limit, and the documentation the process requires. It is written for the Indian resident buyer; NRIs operate under different rules and are not bound by the LRS.

Under the LRS, every resident Indian — including minors — can remit up to USD 250,000 per financial year, which runs April to March. At current exchange levels that is roughly Rs 2.1 to 2.2 crore per person per year. The limit is per individual, it is cumulative across all purposes (travel, education, investment, property), and it resets at the start of each financial year.

Buying property abroad is a permitted capital account transaction under the LRS, so an overseas property purchase is squarely within what the scheme allows. The remittance must be routed through an authorised dealer bank — your bank, acting in its AD capacity — with the correct paperwork.

Tax Collected at Source, or TCS, applies to LRS remittances. As of the rules effective April 1, 2025, the exemption threshold is Rs 10 lakh per financial year per person, raised from the earlier Rs 7 lakh. Below Rs 10 lakh in total annual remittance, no TCS applies. Above it, for investment and property remittances, TCS is collected at 20 percent on the amount exceeding the threshold.

The critical point that many buyers miss: TCS is not an additional tax or a cost. It is an advance tax, collected upfront and fully creditable against your total Indian income tax liability. You claim it back when you file your return — it shows up in your Form 26AS. The real impact is on cashflow, not on total tax: a meaningful sum is locked up with the government between remittance and refund. For a large property purchase, that upfront 20 percent on the amount above Rs 10 lakh can be a substantial temporary outflow to plan for.

A USD 250,000 annual limit per person means a single individual cannot remit enough for many Bali villa purchases in one financial year. The standard, entirely legitimate solution is family pooling. Because the limit is per individual, multiple family members can each remit up to their own USD 250,000 limit toward a joint purchase.

A couple can remit USD 500,000 in a single financial year. A family of four adults can remit USD 1 million. Two financial years, spanning a March-April boundary, effectively doubles what a given set of individuals can send. The property is then typically co-owned in proportion to the contributions, which also needs to align with how the asset is structured in Indonesia and disclosed in India. This is an area to plan with both your banker and your tax advisor before the first remittance.

The remittance itself goes through your AD bank. You will need a PAN — mandatory for all LRS remittances. The bank will require an A2 form declaring the purpose and amount, and supporting documentation for the property purchase. The Rs 10 lakh TCS threshold is PAN-based, not bank-based, so using multiple banks does not reset it — the total across all banks counts toward your annual figure.

The legal structure of the property in Indonesia interacts with the LRS process and with your Indian tax position. A leasehold is treated differently from a company-ownership structure for Indian foreign-asset disclosure. Our guide to leasehold versus freehold in Bali covers the structures, and the step-by-step buying process guide covers where the remittance fits in the overall transaction.

The LRS is not an obstacle — it is a well-established channel that thousands of Indians use to buy abroad every year. What it requires is planning: knowing your annual limit, planning family pooling across individuals and potentially across two financial years, budgeting for the TCS cashflow impact, and keeping the documentation clean. Buyers who plan the remittance before they commit to a purchase avoid the most common problem, which is discovering the limit or the TCS cashflow hit after they have already signed. For the complete journey, our overview of the Bali second home market ties the financing into the wider decision.

• RBI: Liberalised Remittance Scheme
• ClearTax: Tax on Foreign Remittance 2026
• BookMyForex: New TCS Rate on Foreign Remittances, Budget 2026
• ICICI Bank: LRS for Sending Money Abroad from India