Liberalised Remittance Scheme: Limit and TCS Rates

The Liberalised Remittance Scheme permits a resident individual to remit up to USD 250,000 per financial year for permitted current and capital account transactions. From 1 April 2026, TCS applies at 20% on general remittances above ₹10 lakh, 2% on education and medical remittances above ₹10 lakh, nil where education is funded by a loan, and 2% on overseas tour packages from the first rupee.

The limit

The limit applies per individual per financial year and covers both current account transactions such as travel, education and medical treatment, and capital account transactions such as overseas investment and property purchase.

Because it is per individual, family members each have their own limit, which is why family remittances are frequently structured across members. Where remittances are pooled to fund a single acquisition, the source of each individual’s funds should genuinely be their own — remittances routed through family members whose funds were provided by another person invite challenge.

TCS rates from 1 April 2026

TCS is not an additional tax — it is creditable against the individual’s income tax liability. But it is a real cash flow cost at the time of remittance and should be factored into the timing of large remittances.

Permitted and prohibited uses

Permitted: travel, education, medical treatment, maintenance of relatives, gifts and donations within limits, overseas investment in shares and property, and opening foreign currency accounts abroad.

Prohibited: remittance for margin or margin calls to overseas exchanges, trading in foreign exchange abroad, purchase of lottery tickets, and remittance to countries identified as non-cooperative.

Where LRS meets ODI

A resident individual investing in an overseas entity does so within the LRS limit, but is also subject to the overseas investment rules, which impose conditions on the nature of the entity, its activity, and its structure — including restrictions where the overseas entity has a subsidiary in India.

Founders establishing overseas holding structures frequently focus on the LRS limit and overlook the structural conditions, which are the more common source of contravention.

Practical points

Track remittances across all authorised dealers, since the limit is per individual across all banks, not per bank. Retain evidence of source of funds for large capital account remittances. Confirm the overseas structure against the ODI conditions before remitting. And account for TCS in cash flow planning.

Related reading

• overseas investment rules — Overseas Direct Investment (ODI) Rules and Reporting in India
• cross-border estate planning — Cross-Border Estate Planning for NRI and Global Families

Sources

• RBI Master Direction on the Liberalised Remittance Scheme; Section 394, Income-tax Act, 2025 — rbi.org.in and incometax.gov.in