Tax Collected at Source (TCS)
What is Liberalized Remittance Scheme (“LRS”)?
The Liberalized Remittance Scheme (LRS) of the Reserve Bank of India (RBI) allows resident Indian individuals to remit a certain amount of money during a Financial Year to another country for investment, expenditure and other permissible transactions (illustrative list is mentioned below). According to the prevailing regulations, resident Indian individuals may remit up to an amount equal to $250,000 per Financial Year.
Illustrative List
- Private visit to any country (except Nepal and Bhutan)
- Gift or Donation
- Going abroad for employment
- Maintenance of close relatives abroad
- Travel for business, attending international conference, seminar, specialized training, apprentice training
- Expenses in connection with medical treatment abroad
- Abroad studies
What is Tax Collected at Source (‘TCS’)?
Tax Collected at Source (TCS) is an Income Tax collected on some specific transactions given in the Section 394 of the Income Tax Act, 2025. This includes TCS on foreign remittances under LRS.
What is the rate of TCS?
TCS rates have been revised by the Government w.e.f. 1st April, 2026. Please refer to the below tables which contains the applicable TCS rates.
| Sr. No | Type of Remittance | Rate of TCS (PAN available) | Rate of TCS (Without PAN / Inoperative PAN) |
| 1 | Remittance for education purpose, (if amount being remitted is out of loan obtained from notified financial institutions) | NIL | NIL |
| 2 | Remittance for medical treatment/education (other than financed by loan from notified financial Institutions) | 2% of the amount in excess of INR 10 lakh. | 5% of the amount in excess of INR 10 lakh. |
| 3 | Any other purpose (highest number of transaction) | 20% of the amount in excess of INR 10 lakh | 20% of the amount in excess of INR 10 lakh |
Note: Threshold limit of INR 10 Lakh is the aggregate of the above mentioned all foreign remittances for the entire financial year.
Is there any exemption or threshold from levying TCS?
Combined threshold limit of INR 10 Lakh is applicable for all above mentioned remittances.
Can I avail tax credit on TCS?
Yes, tax credit of the TCS amount can be claimed.
TCS amount will be reflected in Form 168 (earlier known as 26AS) of the customer and the same can be claimed as a tax credit at the time of filing income tax return.
Will GST levy on the TCS amount?
GST will not be levied / charged on the TCS amount.
Whether any undertaking is required to be submitted by the customer at the time of making foreign remittances under LRS?
Yes, a declaration is required to be submitted by the customer declaring foreign remittances made by him during the year.
In case the above declaration is not submitted at the time of making foreign remittance under LRS, it shall be presumed that during the financial year, the customer has not made any foreign remittance under LRS through any other AD bank and thus, remittances done only through us shall be considered for the purpose of calculating threshold of INR 10 Lakh.
