Module: | MODULE A: INTERNATIONAL BANKING
Q61: Consider the following statements regarding the retention and reinvestment of income:
1.
Income earned on investments made under LRS can be retained and reinvested overseas.
2.
Income earned on LRS investments must be repatriated to India within 180 days of realization.
3.
Reinvested income is not counted towards the LRS limit of the financial year in which it is reinvested.
Which of the statements given above is or are correct?
✅ Correct Answer: Option B
🎯 Quick Answer:Statements 1 and 3 are correct. Statement 2 is incorrect.
Concept Definition: Retention of Income. Structural Breakdown: Retention Rule: Unlike export proceeds (which have a mandatory repatriation timeline), income (dividends, interest) generated from assets acquired under LRS does not need to be repatriated. It can be retained abroad. Reinvestment: This income can be reinvested in other permissible assets. Limit Impact: Since the funds are already outside India, reinvesting them does not constitute a new remittance. Therefore, it does not count against the current year's USD 250,000 limit. Only fresh funds leaving India are counted.