Investing overseas from India

Q1. Which statement best describes “LRS”?

1. This is a bank permitted by RBI to handle foreign exchange transactions.
2. This is a use of remitted money that the rules allow, such as investing, education, travel or gifts.
3. This is the Liberalised Remittance Scheme, which allows a resident individual to send up to a set amount abroad each financial year for permitted purposes.
4. This is tax collected at source by the bank on certain overseas transfers, which can usually be adjusted against your tax liability.

Q2. Which statement best describes “Feeder fund”?

1. This is a fund that invests in other funds rather than directly in shares.
2. This is an Indian mutual fund that invests in a fund listed overseas, so you invest in rupees without sending money abroad yourself.
3. This is a brokerage account abroad that an Indian resident opens to buy overseas shares or ETFs under LRS.
4. This is a benchmark of foreign companies, such as a US large-company index, that a fund may track.