In short: Under LRS remittance rules TCS India 2025, resident individuals can send up to USD 250,000 abroad per financial year. From 1 April 2025, TCS kicks in only above a ₹10 lakh cumulative threshold, education loans are fully exempt, and foreign credit card spends are outside LRS altogether.
Key points
- LRS is available only to resident individuals (including minors with a guardian’s countersignature). Companies, HUFs, partnership firms, and trusts cannot use LRS for outward remittances.
- The annual ceiling is USD 250,000 per person. Repatriated investment proceeds do not top up your limit — once it is used, it is used for that financial year.
- From 1 April 2025, TCS applies on most LRS remittances only on the portion above ₹10 lakh in a financial year, up from the earlier ₹7 lakh threshold.
- Remittances for overseas education funded through a loan from a recognised financial institution are fully exempt from TCS under the Finance Act, 2025.
- NRIs are not governed by LRS. TCS under LRS applies only when a resident individual remits funds outside India.
- Foreign credit card transactions used abroad are not treated as LRS transactions and are not subject to TCS; debit card and forex card spends do count toward your LRS limit.
What is LRS and who can use it?
The Liberalised Remittance Scheme (LRS) is an RBI scheme that allows a resident individual to send money abroad for a range of permitted purposes, up to USD 250,000 in a single financial year.
The legal backbone for all foreign exchange transactions in India is the Foreign Exchange Management Act, 1999 (FEMA), which came into force on 1 June 2000. Any breach of LRS limits — such as exceeding USD 250,000 without RBI approval — is treated as a FEMA violation.
One important clarification: NRIs fall outside LRS. The scheme is for resident individuals only. If you have recently moved abroad and changed your residential status, your remittance framework changes too.
Who exactly qualifies as a “resident individual”?
Under LRS, a resident individual includes adults as well as minors, provided a guardian countersigns the application for the minor. Non-individual entities — companies, partnership firms, Hindu Undivided Families (HUFs), and trusts — are outside the scheme’s scope for outward remittances.
What purposes are permitted under LRS?
The RBI lists a wide range of permitted purposes. These include private visits abroad (except to Nepal and Bhutan), gifts and donations, employment abroad, emigration, maintenance of close relatives outside India, business travel and conferences, medical treatment and attendant expenses, and studies abroad. Other current account transactions that are not specifically prohibited or restricted are also generally allowed.
There is no limit on the number of remittances you make in a year. The only restriction is the cumulative cap: the total foreign exchange bought or sent must stay within USD 250,000.
How does the USD 250,000 annual cap work?
The cap is a per-person, per-financial-year ceiling — not per transaction and not per bank. All remittances you make through any bank or authorised dealer during April to March are added together.
If you bring investment proceeds back into India, those repatriated funds do not restore your limit. Once USD 250,000 is exhausted, you cannot make further LRS remittances in that year without explicit RBI approval. Exceeding the limit is a FEMA violation.
LRS remittance rules TCS India 2025: the new thresholds explained
Tax Collected at Source (TCS) is the mechanism by which your bank or authorised dealer collects a percentage of the remittance amount and deposits it with the government on your behalf. You can later claim it as a credit when filing your income tax return.
The Finance Act, 2025 made significant changes, effective 1 April 2025. The most important shift is the rise in the exemption threshold from ₹7 lakh to ₹10 lakh for most LRS categories.
| Category | Up to 31 March 2025 | From 1 April 2025 |
|---|---|---|
| Most LRS purposes (investments, gifts, maintenance, etc.) | TCS on amount above ₹7 lakh | TCS on amount above ₹10 lakh |
| Education — self-funded (not via loan) | TCS on amount above ₹7 lakh | TCS on amount above ₹10 lakh |
| Education — funded through a loan from a financial institution | Concessional TCS rate applied | Fully exempt from TCS |
| Overseas tour packages (up to ₹10 lakh) | 5% TCS | 5% TCS (unchanged) |
| Overseas tour packages (above ₹10 lakh) | 20% TCS | 20% TCS (unchanged) |
| Foreign credit card transactions abroad | Position uncertain / debated | Formally excluded from LRS; no TCS |
How is the ₹10 lakh threshold counted?
The ₹10 lakh threshold is PAN-based and cumulative across the entire financial year. It does not matter how many banks or authorised dealers you use. Every rupee remitted under LRS — across all accounts — is counted together against your single ₹10 lakh threshold.
Only the portion above ₹10 lakh attracts TCS (for permitted categories). Below that amount, no TCS is deducted for most purposes.
What about debit cards and forex cards?
Spending abroad on a debit card or a forex (prepaid travel) card does count toward your USD 250,000 LRS annual limit. However, the Finance Act, 2025 formally clarified that spending via a foreign credit card while abroad is not an LRS transaction and is therefore not subject to TCS.
What changes from 1 April 2026?
The Finance Act, 2026 amended the corresponding provision of the Income Tax Act, 2025 (which replaces the Income Tax Act, 1961) and introduced further changes to TCS rates on LRS remittances, effective 1 April 2026. The ₹10 lakh cumulative threshold for the financial year remains in place across all LRS purposes. Under the revised framework, education and medical remittances above the ₹10 lakh threshold attract a more favourable rate compared to other categories.
Because these rules took effect during this article’s preparation and detailed rate tables are still being consolidated by banks and authorised dealers, we recommend verifying the exact applicable rates directly with your bank or checking the RBI and Income Tax Department portals before making a remittance after 1 April 2026.
What does this mean for NRIs?
NRIs are not resident individuals under FEMA and therefore LRS — and the TCS provisions attached to it — do not apply to them. If you are an NRI looking to repatriate funds from your NRE or NRO account, or move money between countries, the rules governing your situation are different and sit outside LRS.
For a broader understanding of how Indian law affects financial rights for people living abroad or returning to India, you can explore our Law for You guides, which break down complex legal frameworks in plain language.
Practical checklist before remitting money abroad
Before you initiate a remittance, it helps to run through a few basics. First, confirm you are a resident individual under FEMA — if your status has recently changed, check with a qualified adviser. Second, track your cumulative remittances for the financial year across all banks to stay within USD 250,000. Third, note whether you have already crossed the ₹10 lakh PAN-based threshold for TCS purposes. Fourth, if your remittance is for overseas education funded by a loan, carry documentation from the lending institution so your bank can apply the correct (nil) TCS rate.
Frequently asked questions
Can a minor send money abroad under LRS?
Yes. Minors are eligible to remit under LRS, but a guardian must countersign the application. The minor’s remittances count toward their own USD 250,000 annual limit, not the guardian’s.
If I bring back money I invested abroad, does my LRS limit reset?
No. Repatriated funds — money you bring back to India from an overseas investment — do not replenish your USD 250,000 annual LRS limit. Once you have remitted that amount in a financial year, you cannot send more without RBI approval, regardless of what you have brought back.
Is TCS a tax or can I get it back?
TCS is not an additional tax in most cases. Your bank collects it on behalf of the government and deposits it against your PAN. You can claim it as a credit when you file your income tax return for that year. If your total tax liability is lower than the TCS collected, you are entitled to a refund of the difference.
Primary sources
- Foreign Exchange Management Act, 1999 — India Code (indiacode.nic.in)
- Income Tax Act, 1961 (and Income Tax Act, 2025) — India Code (indiacode.nic.in)
- RBI Master Directions and LRS FAQs — Reserve Bank of India (rbi.org.in)
- TCS provisions and guidance — Income Tax Department (incometax.gov.in)
Written by Editorial Team, The Courtroom · Last verified 2026-07-13
This article is for general information only and is not legal advice. Laws change; verify against the primary sources cited and consult a qualified advocate for your situation.
