TCS on Foreign Remittance Under LRS: Rates, Thresholds, Exemptions & Refunds

Updated on Thursday, October 22nd, 2026 | By IndusInd Bank

• Summary:
  
  TCS levied on foreign remittances under the LRS framework depends on the purpose of the remittance.
• This article lists the TCS rates for various transaction types for FY 2026-27 along with the key documents and procedures for claiming TCS refunds.

The Reserve Bank of India introduced the Liberalised Remittance Scheme (LRS) on February 4, 2004, to allow resident individuals, including minors, to freely remit a specified amount overseas each financial year for approved purposes. The initial limit of US$25,000 has been increased in stages to US$2.5 lakh per financial year, in line with improving economic conditions. As the LRS transactions grew steadily, the Union Budget of 2020 introduced Tax Collected at Source (TCS) on these transactions to curb tax evasion, widen/deepen the tax base and monitor international fund transfers.

This article explains the TCS provision on LRS transactions, applicable thresholds and exemptions and the process of claiming TCS refunds.

What is TCS on Foreign Remittances Made Through the Liberalised Remittance Scheme?

TCS on LRS transactions is levied under Section 206C(1G) of the Income Tax Act by the bank, other authorised dealers or sellers of overseas tour plans at the time of remitting money abroad through the LRS framework.

Note that TCS is not an additional tax or an expense. Like TDS, TCS on LRS transactions is collected upfront and can be adjusted against your total income tax liability while filing your income tax return.

What are the TCS Rates for LRS Transactions?

The applicable TCS rates on LRS remittances vary depending on the purpose of remittances. Here is a table listing the prevalent TCS rates for Financial Year 2026-27.

The threshold of Rs 10 lakh is cumulative for all remittances made through the LRS framework, regardless of purpose. For example, if you remit ₹6 lakh in this financial year for your child’s overseas education and spend ₹7 lakh on overseas medical treatment, the first ₹10 lakh cumulative amount would be exempt from TCS and the remaining ₹3 lakh would be subject to TCS collection.

Note: This is for informational purposes only. Kindly check the latest data/figures for accurate information.

Can You Claim a Refund or Adjustment of TCS Paid Under LRS?

A remitter who has opted for the LRS framework for overseas education, medical treatment or tour/travel may not pursue them later. In such cases, the bank or the seller of the overseas tour package will not refund the TCS to the consumer as the TCS amount has already been deposited with the tax authority. Such remitters must claim tax refunds while filing their ITR. If the TCS collected exceeds his/her tax liability, the surplus would be refunded to such remitters.

How to Claim a Refund of the TCS Paid on Foreign Remittances?

Remitters should follow these steps for claiming a refund of the TCS collected on foreign remittances:

• Fetch the TCS certificate (Form 27D) for the transaction from the bank or the package tour seller
• Check whether the TCS amount is reflected in Form 26AS
• Include the TCS amount in the tax credit schedule while filing your income tax return
• If the TCS collected exceeds your total tax liability for the year, the excess amount is refunded after your return is processed.

Also Read: Outward Remittance Rules You Need to Know

Conclusion

An understanding of TCS on foreign remittances can help you plan your overseas payments and avoid surprises. Ensure to fetch Form 27D from the collectors and verify the credit in your Form 26AS. As TCS is a tax credit rather than an additional tax, any excess of TCS over your tax liability can be claimed as an ITR refund.

Frequently Asked Question

1. Is the TCS calculated only on the remittance amount or after adding bank and foreign exchange charges?

Tax Collected at Source (TCS) is calculated on the transaction amount, before adding any foreign exchange markup, applicable bank fees or GST on those charges.

2. How is the LRS threshold shared across multiple authorised dealer banks?

The LRS threshold of US$2.5 lakh per financial year is a single, unified, PAN-based cumulative limit tracked across all banks and RBI-licensed remittance entities in India.

3. Can a person other than the remitter claim TCS credit?

TCS credit can be transferred to another person only if:

• The income of the remitter is assessable in the other person’s name.
• The remitter files a declaration with the collector specifying details of the other person and reasons for such credit.
• The authorised dealer/bank or the tour operator reports it in their TCS statement and issues a TCS certificate in the other person’s name.

4. What happens to the collected TCS on cancellation of an LRS transaction?

TCS on LRS remittances, once collected, cannot be refunded by the banks or other deductors. However, the remitter can claim the credit of that TCS amount while filing his or her income tax return.

5. How can remitters verify TCS in their tax records?

Remitters can verify the TCS on their foreign remittances by obtaining a TCS Certificate (Form 27D) from the bank or other applicable collector. The TCS amount should also appear in their Form 26AS. If it does not, the collector may have failed to report the transaction or deposit the collected TCS with the tax authorities.