Corporate Forex for Business Travel: Why It Sits Outside LRS

A finance team booking foreign exchange for an employee's overseas trip often reaches for the same rules an individual traveller uses, and quietly applies limits and taxes that do not actually apply. Business travel forex paid for by the company works under a different part of the rulebook from personal travel, and knowing which rulebook you are in changes both the paperwork and the tax.

Here is the short version. When a company sends an employee abroad on business and the company pays for the trip, the foreign exchange for it sits outside the Liberalised Remittance Scheme. LRS is only for resident individuals spending their own money, so a company buying forex for an employee's business travel is treated as a business current-account transaction instead, with no USD 250,000 individual cap and, importantly, no TCS. The distinction turns on one thing: who bears the cost. If the employer pays, it is outside LRS and TCS-free. If the employee pays and claims it back, it falls under LRS and TCS applies. The rest of this guide explains how to get it right.

The rule that decides everything: who bears the cost

There is one question that determines how business travel forex is treated, and everything else follows from it. Who is actually paying for the trip.

If the company bears the expense directly, buying the forex in the company's name for the employee's business visit, it is treated as a business transaction outside the Liberalised Remittance Scheme. The Finance Ministry has clarified exactly this: when an employee is deputed by a company for a business visit and the expenses are borne by the employer, those expenses are treated as residual current-account transactions outside LRS, which an authorised dealer may permit without the individual limit, subject to checking that the transaction is genuine.

If the employee bears the expense themselves, paying for their own forex and claiming reimbursement later, it is treated as their personal spending under LRS. The same clarification confirms this: business travel expenses borne by an employee are considered under LRS, while those borne by the employer fall outside it.

So the same trip can sit under two completely different sets of rules depending only on who pays. For a company, the practical takeaway is to buy the forex directly rather than have employees buy it and expense it back.

Why company-bought travel forex is not under LRS

The Liberalised Remittance Scheme, by its own terms, is a facility for resident individuals. It lets a resident person send up to USD 250,000 abroad in a financial year for personal purposes. Companies, partnership firms and other entities cannot use LRS at all.

Businesses instead operate under the general framework for current-account transactions. A company can buy foreign exchange for genuine operational needs, including sending employees abroad on business, through an authorised dealer, without the individual USD 250,000 ceiling. The authorised dealer's job is to confirm the transaction is bona fide and properly documented, rather than to apply a personal limit that was never meant for companies.

This is not a loophole. It is simply the correct category. Business travel funded by the employer is a company expense, and company expenses run under company rules, not the personal remittance scheme.

The big consequence: no TCS

The most valuable difference, and the one most often missed, is tax. TCS, the Tax Collected at Source on foreign remittances, applies only to remittances made by individuals under LRS. It does not apply to a company buying forex for an employee's business travel.

The effect is worth seeing in numbers. Suppose an employee is heading abroad for a fortnight of client meetings and the trip needs the equivalent of USD 20,000 in forex, roughly ₹19 lakh. If the company buys that forex directly, no TCS is collected. If instead the employee had bought it under their own LRS, and it took their personal remittances for the year past ₹10 lakh, TCS at 20% would apply to the amount over the threshold, tying up around ₹1.8 lakh until they reclaimed it in their tax return.

That ₹1.8 lakh would not be lost, since TCS is an advance tax and comes back at filing. But it would be the employee's own money locked up for months over a company trip, and it is entirely avoidable. Buying the forex the right way, as a company purchase, keeps it outside the TCS net altogether, with nothing to lock up and nothing to reclaim.

Is there a limit on how much a company can buy

For an individual, the ceiling is the USD 250,000 LRS limit. For a company buying forex for genuine business travel, there is no equivalent fixed cap.

The authorised dealer releases the foreign exchange based on the genuineness of the transaction, supported by the company's documentation, rather than against a set personal limit. A company sending several employees on several trips through the year is not constrained by any one person's allowance. What matters is that each purchase is a real business need, properly evidenced, which the authorised dealer verifies before releasing the currency.

What the employee can still only carry in cash

One limit does still apply, and it is easy to overlook because it sits on the traveller rather than on the purchase. However much forex the company buys, the amount the employee can physically carry in foreign currency notes is capped.

For most destinations, a traveller may carry up to USD 3,000 per trip in physical currency notes. The rest of the trip's forex is meant to travel in another form, which in practice means a forex card. So the sensible setup for business travel is a modest amount of cash for arrival and incidentals, with the bulk loaded onto a forex card that the employee uses for hotels, meals and transport abroad. The company buys the full amount it needs without an LRS limit, and the split between cash and card simply follows the ordinary carry rule.

What documents a company needs

The paperwork for corporate travel forex is straightforward, and it is about proving the trip is a genuine business purpose.

An authorised dealer will typically want a letter or authorisation from the company confirming that the employee is being sent on business, the employee's passport and visa, and the company's own details, including its GST registration. Depending on the amount and the dealer's process, a board resolution or a standing authorisation for travel purchases may also be asked for. The common thread is bona fides: the documents establish that this is a real business trip funded by the company, which is exactly what takes it outside LRS.

The GST angle for companies

There is one more difference that favours the company route, and it concerns GST.

Buying foreign exchange is a service, so GST applies on the conversion, calculated on a small notional value and capped at a maximum. For an individual traveller, that GST is simply a cost. For a GST-registered company, the GST charged on forex bought for business travel can generally be claimed as input tax credit, since it is an expense incurred in the course of business, subject to the usual conditions for claiming credit. It is worth confirming the treatment with your accountant for your own circumstances, but the principle is that a company is often able to recover this GST in a way an individual cannot.

When business travel does fall under LRS

It is just as useful to know when the personal rules do apply, so the tax is not triggered by accident.

The moment the employee pays for their own business travel forex, it becomes their personal spending under LRS, and it counts towards their USD 250,000 limit and can attract TCS above the ₹10 lakh threshold, even though the trip is for work. This commonly happens when an employee books their own currency and claims it back on expenses. The reimbursement from the company does not change how the original purchase was treated, since at the point of purchase it was the individual's own money under LRS.

Avoiding this is simply a matter of process. Where the company wants business travel to sit outside LRS and clear of TCS, the company should be the one buying the forex, in its own name, rather than reimbursing an employee who bought it personally. The rule rewards getting the sequence right.

Frequently asked questions

Does TCS apply to company-bought forex for business travel?

No. TCS applies only to foreign exchange remittances made by individuals under the Liberalised Remittance Scheme. When a company buys forex for an employee's business travel and bears the cost, it is a business current-account transaction outside LRS, and no TCS is collected.

Is corporate business travel forex counted under the LRS limit?

No. LRS is for resident individuals only and does not apply to companies. Foreign exchange a company buys for an employee's genuine business travel is not counted against anyone's USD 250,000 LRS limit, and there is no equivalent fixed cap, subject to the transaction being genuine and documented.

What decides whether business travel forex is under LRS or not?

Who bears the cost. If the employer pays for the trip directly, the forex is outside LRS and free of TCS. If the employee pays for it themselves and claims reimbursement, it is treated as their personal spending under LRS, counts towards their limit, and can attract TCS.

How much foreign currency can an employee carry for a business trip?

The company can buy the full amount the trip needs without an LRS limit, but the employee may physically carry up to USD 3,000 per trip in foreign currency notes for most destinations. The balance should travel on a forex card rather than as cash.

Can a company claim GST back on business travel forex?

Buying forex is a service and GST applies on the conversion. A GST-registered company can generally claim this GST as input tax credit, since it is a business expense, subject to the usual conditions. An individual traveller cannot. Confirm the treatment with your accountant for your situation.

Should employees buy their own forex and claim it back?

For business travel that a company wants kept outside LRS and free of TCS, no. If the employee buys the forex personally, it falls under their LRS limit and can attract TCS, even though the company reimburses it. The company should buy the forex directly instead.

Business travel forex is one of those areas where getting the category right saves both tax and paperwork. Keep company-funded trips as company purchases, and they stay outside LRS, clear of TCS, and free of the individual limit, with only the ordinary cash-carry rule to observe. Matrix Forex is an RBI-authorised AD Category-II dealer that handles corporate travel forex, currency and forex cards for employee trips at the live interbank rate with no markup, and with a branch team you deal with directly rather than a call centre. Visit matrixforex.in to arrange corporate forex.