The LRS limit is US$250,000 per financial year for each resident individual. Under the RBI's Liberalised Remittance Scheme you can send up to that amount abroad for permitted purposes. Tax Collected at Source (TCS) applies on top. From 1 April 2026 (FY 2026-27), the first ₹10 lakh per year is TCS-free for most purposes. Above that, remittances for investment, gifts or family support attract 20%, self-funded education and medical treatment attract 2%, and education funded by a loan from a financial institution attracts nil. Overseas tour packages attract 2% from the first rupee. TCS is not a final tax: you claim it back against your income tax in your ITR.
This guide covers what LRS allows, the current TCS rate card and how it changed, how parents in India can send money to children abroad, the gift-tax angle, worked examples, and why NRIs use a different route altogether.
What the LRS limit covers
- Who: resident individuals only, including minors (a guardian signs for them). Companies, partnerships and HUFs cannot use LRS.
- How much: US$250,000 per person per financial year (April-March), across all banks and all purposes combined. The limit has been unchanged since 2015.
- How: through an authorised dealer bank, with your PAN, Form A2 and a declaration of purpose.
Permitted under LRS
- Current account: travel, education, medical treatment, gifts and donations, maintenance of close relatives abroad, and emigration or employment expenses.
- Capital account: buying foreign shares, ETFs and mutual funds, buying property abroad, opening a foreign currency account, and certain overseas direct investments under the Overseas Investment rules.
Not permitted
- Margin trading or forex trading on overseas exchanges, lottery, betting and sweepstakes.
- Remittances to countries flagged as non-cooperative by the FATF.
- Money that sits unused. Funds not used for the declared purpose within 180 days generally have to be brought back.
Buying US stocks is the most common capital-account use. See our guide to investing in US stocks under LRS for the tax side.
TCS on foreign remittance: the FY 2026-27 rate card
TCS on LRS used to be governed by Section 206C(1G) of the Income-tax Act, 1961. From 1 April 2026, the Income-tax Act, 2025 moves it to Section 394, and Budget 2026 cut several rates.
| Purpose | FY 2024-25 (old) | FY 2025-26 | FY 2026-27 (from 1 April 2026) |
|---|---|---|---|
| Education, funded by a loan from a financial institution | 0.5% above ₹7 lakh | Nil | Nil |
| Education, own funds | 5% above ₹7 lakh | 5% above ₹10 lakh | 2% above ₹10 lakh |
| Medical treatment abroad | 5% above ₹7 lakh | 5% above ₹10 lakh | 2% above ₹10 lakh |
| Overseas tour package | 5% up to ₹7 lakh, 20% above | 5% up to ₹10 lakh, 20% above | 2% from the first rupee |
| Everything else (investments, gifts, family maintenance, property abroad) | 20% above ₹7 lakh | 20% above ₹10 lakh | 20% above ₹10 lakh |
Key points:
- The ₹10 lakh threshold is per person, per financial year, combined across purposes and banks. An education remittance in May uses up threshold that an investment remittance in November would otherwise have had.
- TCS is charged on the excess only. If you remit ₹12 lakh for investment, TCS is 20% of ₹2 lakh, which is ₹40,000.
- TCS is added on top. The full remittance goes abroad, and TCS is debited from your account in addition.
- No PAN means a higher rate. Always give your PAN.
- International credit card spends abroad are currently outside LRS and TCS. Debit card and forex card spends count. The RBI has reviewed this before, so check before large card spends.
Rates come from Budget 2025 and Budget 2026 as enacted. Confirm the current slab with your bank or the CBDT before a large transfer.
TCS is creditable, not a cost, if you claim it
The bank deposits TCS against your PAN. It shows in your annual information statement (Form 168, formerly Form 26AS) and AIS, and the bank issues a TCS certificate (Form 133, formerly Form 27D). You can use it in three ways:
- In your ITR: TCS counts as tax already paid. If it is more than your final tax, the excess is refunded.
- Through your employer: since October 2024, salaried people can declare TCS to their employer so it is counted before TDS is deducted from salary. This avoids a year-long wait for the cash.
- Against advance tax: TCS already paid reduces the advance tax you owe in later instalments.
The real cost is the time value of money. If ₹6 lakh sits with the government for 12-15 months, that is money not invested. People who do not file returns (retired parents, students' families) lose the credit altogether, so file even if your income is low. See our ITR filing guide for the schedules.
How to send money abroad from India: parents to NRI children
A common case is parents in India helping a child in the US, UK or Canada with a house down payment, a wedding or a business. The rules on each side:
India side
- Parents remit under LRS as a gift or maintenance of a close relative. Both fall under "other purposes": nil up to ₹10 lakh, 20% above.
- Each parent has a separate US$250,000 limit and ₹10 lakh threshold, if each uses their own money. Two parents sending ₹10 lakh each means ₹20 lakh with no TCS.
- Gift tax in India: gifts between relatives such as parents and children are exempt for the receiver. The rule that deems gifts from residents to non-residents as Indian income also exempts gifts to relatives.
- Paying a child's foreign university fees directly counts as education (2% above ₹10 lakh), not a gift. Use the right purpose code.
Receiving side (US example)
- There is no US tax for the child on a gift from a parent abroad.
- If total gifts from foreign individuals exceed US$100,000 in a calendar year, the child must file Form 3520 (a disclosure form, not a tax), and penalties for missing it are steep.
- Income the money later earns is taxable to the child.
If the money is the child's own
If the child is an NRI and the money is theirs, such as sale proceeds of their own flat, rent or an inheritance, it should not go through the parents' LRS. The child repatriates it from their own NRO account under the US$1 million per year facility, with Form 145 (formerly 15CA) and Form 146 (formerly 15CB). That route is not LRS and attracts no TCS. See how NRIs repatriate money from India and NRE vs NRO accounts.
Worked examples (FY 2026-27, at a round illustrative ₹85 to US$1)
1. Investing ₹42.5 lakh (about US$44,000) in US index funds
- Remittance: ₹42,50,000, with no other LRS remittance this year.
- TCS-free: first ₹10,00,000.
- TCS at 20% on ₹32,50,000: ₹6,50,000.
- Cash out that day: ₹49,00,000.
If the investor's total tax for the year is ₹4 lakh, they get a ₹2.5 lakh refund after filing their ITR. If a spouse remits half from their own funds, each gets a ₹10 lakh threshold and total TCS falls to ₹4,50,000.
2. Master's tuition of ₹35 lakh
| Funding | TCS under old ₹7L rules | FY 2025-26 | FY 2026-27 |
|---|---|---|---|
| ₹35L from own savings | 5% of ₹28L = ₹1,40,000 | 5% of ₹25L = ₹1,25,000 | 2% of ₹25L = ₹50,000 |
| ₹35L education loan from a bank or NBFC | 0.5% of ₹28L = ₹14,000 | Nil | Nil |
Plan the full cost of studying abroad with our child education cost calculator.
3. Family trip to Europe
A ₹4 lakh package from an Indian tour operator attracts TCS of 2%, or ₹8,000, from the first rupee. Booking flights and hotels yourself with an international credit card generally falls outside LRS and TCS.
NRIs: you do not use LRS
LRS is only for residents. As an NRI:
- NRE and FCNR balances are freely repatriable with no limit and no TCS.
- NRO balances, including sale proceeds of Indian property, can go out up to US$1 million per financial year after tax, with Form 145/146 and no TCS.
- When you return and become resident, LRS applies to you again. Your US$250,000 counts from the day you are resident, which matters if you still hold US investments or send money to children abroad. Plan this with the return-to-India planner, or get a full cross-border plan through our NRI planning hub.
Common mistakes
- Writing off TCS as a sunk cost. File an ITR and claim it, or declare it to your employer.
- Using old figures. The ₹7 lakh threshold ended on 31 March 2025, and the 5% education/medical rate and 5%/20% tour-package slabs ended on 31 March 2026.
- Getting the order wrong. If tuition goes first, it uses up the ₹10 lakh threshold but saves only 2%, and a later investment remittance pays 20% from the first rupee. If you will make both in the same year, let the 20%-purpose remittance use the threshold.
- One parent sending everything. Splitting between parents who each have their own funds doubles the TCS-free amount. The money must genuinely belong to each remitter.
- Routing an NRI child's own money through the parents' LRS. This triggers 20% TCS for no reason. Use the child's NRO repatriation instead.
- Forgetting Form 3520 in the US when gifts cross US$100,000.
- Choosing the wrong purpose code. Tuition paid to a university is education; money sent to the student's bank account for general use may be treated as "other".
Bottom line
The LRS limit, US$250,000 per person per year, is rarely the binding constraint. TCS is: 20% above ₹10 lakh for investments and gifts, 2% for education and medical, nil for loan-funded education, and 2% flat on tour packages from FY 2026-27. Spread remittances across family members and financial years, use the right purpose, and always claim the credit. This is general information, not personal advice. Confirm your case with a CA before a large remittance. If you are an NRI or moving between countries, start with our NRI planning hub to map remittances, taxes and accounts in one place.