Module: | MODULE A: INTERNATIONAL BANKING
Q49: Consider the following statements regarding the aggregate remittance limits for resident individuals:
1. The limit of USD 250,000 is available per financial year, which runs from April 1 to March 31.
2. The limit allows a resident to remit funds for current account transactions but strictly prohibits capital account transactions.
3. If an individual remits USD 250,000 for a capital account transaction, they cannot make further remittances for current account purposes in the same financial year without approval.
Which of the statements given above is or are correct?
2. The limit allows a resident to remit funds for current account transactions but strictly prohibits capital account transactions.
3. If an individual remits USD 250,000 for a capital account transaction, they cannot make further remittances for current account purposes in the same financial year without approval.
Which of the statements given above is or are correct?
✅ Correct Answer: C
🎯 Quick Answer:
Statement 1 is correct as the limit applies on a Financial Year basis. Statement 3 is correct as the limit is combined. Statement 2 is incorrect because LRS explicitly allows both current and capital account transactions.Structural Breakdown: Period: The limit resets on April 1 of every year.
It is not based on the calendar year.
Scope: The limit is aggregate (combined). It covers all permissible Current Account transactions (like travel, education, medical care) and Capital Account transactions (like purchasing property abroad, investing in foreign shares, or opening a foreign bank account). Exhaustion Rule: Once the USD 250,000 limit is used up, whether for buying a house (capital) or for tourism (current), no further remittance is allowed for any purpose in that year without prior RBI approval.