TCS on Foreign Remittance: Union Budget 2025 Updates

Date: 12th June 2025 | Read time: 2 Minutes

Union Budget 2025 has brought notable changes to the Tax Collected at Source (TCS) provisions, especially those under the Liberalised Remittance Scheme (LRS). The revised rules are designed to offer relief to individuals remitting funds abroad—whether for education, travel, or family maintenance—by increasing the TCS threshold and exempting certain categories. Here’s a breakdown of what’s changed and what it means for you.

TCS (Tax Collected at Source) is a tax that banks or authorised dealers collect when an individual remits money abroad under the LRS framework. This includes remittances for:

• Higher education
• Medical treatment
• Living expenses for family members abroad
• International investments
• Travel or tour packages etc.

The TCS amount is later adjusted against your overall tax liability or refunded, based on your tax return.

Finance Minister Nirmala Sitharaman announced revisions to the TCS thresholds for foreign remittances in the Union Budget 2025. These changes aim to reduce the immediate cash outflow and simplify compliance for remitters.

1. Higher TCS-Free Limit

Earlier, any remittance exceeding INR 7 lakh in a financial year attracted TCS. Now, this threshold has been raised to INR 10 lakh, providing more breathing room for remitters—especially those managing education or living costs abroad.

2. Relief for Education Loans

If you're sending money abroad for education and the funds are sourced from a recognised educational loan, no TCS will be levied—regardless of the remitted amount. This significantly eases the financial load on students and parents.

3. Smoother Cash Flow

With a higher threshold and targeted exemptions, you can retain more liquidity during the remittance process. This is particularly useful when planning large payments like tuition fees or living expenses in one go.

Scenario 1:

You plan to send INR 9.5 lakh abroad for your daughter’s university tuition in the UK.

• Earlier:

  INR 2.5 lakh (above INR 7 lakh) attracted TCS at 5% = INR 12,500 collected upfront.

• Now:

  Entire amount falls under the new INR 10 lakh threshold → No TCS applicable.

Scenario 2:

You book an overseas family tour worth INR 11 lakh.

• TCS is now applicable only on INR 1 lakh (above INR 10 lakh).
• Depending on the category, TCS may be 5% (general) or 20% (tour package).

1. Do I need to pay TCS if I remit INR 9 lakh for education not funded by a loan?

No. As per the revised threshold, remittances up to INR 10 lakh do not attract TCS.

2. Is TCS applicable on remittances made for family maintenance abroad?

Yes, but only if the total outward remittance exceeds INR 10 lakh in a financial year.

3. Can I claim a refund for TCS deducted?

Yes. You can adjust the TCS amount against your total income tax liability or claim a refund while filing your ITR.

4. Will this change affect business remittances?

These changes apply to individuals remitting under LRS. Business transactions are governed separately under FEMA and Income Tax provisions.

At AU Small Finance Bank, we simplify your international remittance experience:

• Seamless outward remittance under LRS
• Competitive exchange rates and transparent charges
• Expert support for education, medical, or family transfers
• TCS-compliant processes aligned with Budget 2025 norms

Whether you’re planning for your child’s university fees or sending funds to a relative abroad, AU Remit ensures your money reaches safely—and in a tax-smart way.

The changes in TCS rules under Union Budget 2025 reflect the government’s intent to simplify tax compliance and support individuals managing global obligations. With higher thresholds and targeted exemptions, remitters can now plan better and enjoy greater financial flexibility.

Start your international transfer journey with AU Remit today.

Disclaimer: The information provided in this blog is for general awareness and does not constitute financial or tax advice. Please consult your tax advisor for personalised guidance based on your financial situation.