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LRS for sending money abroad from India
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Understanding the limits on outward remittances under LRS
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Knowing the permitted and restricted purposes under LRS
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Applicability of TCS on outward remittance
The below content is purely for informational purposes and is not intended to constitute advisory of any kind. Please note, these are in-depth articles which are best viewed on large screen devices like laptops, desktops and tablets. The position reflected in this article has been updated as of March 15, 2025 basis the Union Budget 2025-2026 updates.
The Liberalised Remittance Scheme (LRS), introduced by the Reserve Bank of India (RBI), enables Indian residents to remit funds abroad for various approved purposes. This article provides insights into the LRS limits, applicability, and compliance guidelines for sending remitting money overseas.
Limits and applicability under LRS
As per current LRS regulations, Indian residents can remit up to USD 250,000 per financial year (April-March). This scheme is applicable to resident individuals, including minors. For minors, remittances must be facilitated by a parent or guardian.
It is important to note that exchange rate conversion and/or transaction fees associated with outward remittances are also included within the USD 250,000 limit, depending on the chosen transfer method (e.g., branch or online remittance).
Did you know?
Funds loaded onto forex cards are considered outward remittances under the LRS regulations. The LRS limit applies to the individual funding the card, not to the cardholder.
Permitted purpose of remittance under LRS
Indian residents can remit funds abroad under LRS for the following purposes:
Please note, tables are best viewed on desktops or in landscape mode on mobile phones. On mobile phones, please swipe to view all content.
Education abroad |
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Maintenance of relatives |
Support for close relatives such as brother (or stepbrother), daughter, son-in-law, father (or stepfather), mother (or stepmother), member of Hindu Undivided Family (HUF), sister son (or stepson), daughter-in-law and spouse. |
Travel |
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Gifting |
Money sent as a gift to family and friends abroad. |
Transfer to your own account |
Deposit to own bank account abroad. |
Others |
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Prohibited purposes under LRS
Certain remittances are strictly restricted under LRS, including:
- Purchasing lottery tickets/sweepstakes or banned magazines
- Remitting money from India for margins or margin calls to overseas exchanges or counterparties
- Purchasing Foreign Currency Convertible Bonds (FCCBs) issued by Indian companies in the overseas secondary market
- Foreign exchange trading abroad
- Capital account remittances, directly or indirectly, to countries identified by the Financial Action Task Force (FATF) as "non-cooperative countries and territories"
- Remittances, directly or indirectly, to individuals and entities identified as significant risks for committing acts of terrorism, as advised separately by the Reserve Bank of India (RBI)
- Gifting by a resident to another resident in foreign currency for the credit of the latter's foreign currency account held abroad under LRS
Tax Collected at Source (TCS) on Remittances:
The Finance Act, 2020 introduced Tax Collected at Source (TCS) for outward remittance under LRS, TCS is applicable at the Permanent Account Number (PAN) level and must be complied with while filing tax returns. TCS paid can be used to offset tax liability in India at the time of filing returns.
Did you know?
Non-Resident Indians (NRIs) cannot remit money under LRS and hence are not liable to pay TCS while remitting money from India.
TCS rates vary depending on the purpose of the remittance and the total amount being transferred. No TCS is required for remittances up to Rs 10 lakh made for education fees obtained via loans from specified financial intuitions.
Further, TCS is exempted up to a limit of Rs 10 lakh per financial year per person through all modes of payment regardless of the purpose of remittance. Beyond this threshold, TCS rates vary depending on the purpose of payment, as tabulated below:
Please note, tables are best viewed on desktops or in landscape mode on mobile phones. On mobile phones, please swipe to view all content.
| Purpose | Rate of TCS * |
|---|---|
Education financed by a loan from a financial institution |
TCS not applicable |
Education not financed by a loan |
5% of the aggregate of the amounts more than ₹10 lakh in a financial year |
Medical treatment |
5% of the aggregate of the amounts more than ₹10 lakh in a financial year |
Purchase of overseas tour programme package |
In a financial year: 5% of the aggregate of the amounts upto ₹10 lakh and 20% of the aggregate of the amounts in excess of ₹10 lakh |
Any other purpose: (other than those specified above) |
20% of the aggregate of the amounts more than ₹10 lakh in a financial year |
*TCS rates are applicable effective April 1, 2024, according to the Finance Act, 2025.
Let us understand this with an illustration.
Sunita, a resident Indian, remits Rs 13 lakh for her daughter’s tuition fees in the UK. The foreign educational institution has no presence in India. In this case, TCS at 5% applies to the amount exceeding Rs 10 lakh, resulting in a tax of Rs 15,000 (5% of the excess Rs 3 lakh).
Further, if Sunita has taken an education loan from a specified institution to pay her daughter’s tuition fees, she is not supposed to pay any TCS .
Consult a tax advisor or financial expert to understand these regulations effectively.
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