Liberalised Remittance Scheme (LRS): $250,000 Limit & TCS Rules (FY 2026-27)
Last verified: October 2026, against the RBI Liberalised Remittance Scheme rules, the Finance Act 2026 and the Income-tax Act 2025. Rules in this area change often and vary by bank — confirm specifics with your authorised dealer before remitting. General information, not personal financial advice.
Want to send money abroad — to fund a child’s education, buy foreign shares, travel, or invest in property overseas? Resident Indians use the RBI’s Liberalised Remittance Scheme (LRS), which allows up to USD 250,000 per financial year. Budget 2026 cut the tax collected at source (TCS) on education, medical and tour-package remittances from 1 April 2026; here is the current picture for FY 2026-27.
What the LRS is
Every resident individual — including minors, with a guardian signing — can remit up to USD 250,000 per financial year for permitted current and capital account transactions without prior RBI approval. The limit is per person, so a family of four can remit up to USD 1 million a year between them. Remittances go through an authorised dealer (AD) bank, and quoting your PAN is mandatory.
What you can use it for
- Overseas education and medical treatment.
- Travel — private or business.
- Gifts, donations and maintenance of relatives abroad.
- Investments — foreign shares, bonds, ETFs, property and foreign-currency deposits, including through GIFT City IFSC and platforms that let you invest in US stocks from India.
What is not allowed
Margin or leveraged forex trading, lottery tickets, banned publications, remittances to FATF-identified non-cooperative jurisdictions, and remittances to entities flagged for terrorism or illicit activity.
TCS on LRS — FY 2026-27 rules
Banks collect TCS on LRS remittances under Section 394 of the Income-tax Act 2025 (formerly Section 206C(1G) of the 1961 Act). The ₹10 lakh annual threshold is unchanged. Budget 2026 cut the rates for education, medical treatment and overseas tour packages from 1 April 2026:
| Purpose | FY 2025-26 | FY 2026-27 (from 1 Apr 2026) |
|---|---|---|
| Any purpose, total up to ₹10 lakh in the year | Nil (except tour packages) | Nil (except tour packages) |
| Education funded by a loan from a financial institution | Nil | Nil |
| Education (own funds) and medical treatment — above ₹10 lakh | 5% | 2% |
| Investment, gifts and other purposes — above ₹10 lakh | 20% | 20% |
| Overseas tour packages | 5% up to ₹10 lakh, 20% beyond | 2% from the first rupee |
TCS is not an extra tax. It is collected upfront and you claim it as a credit — or a refund — when you file your return. See also our guide to TCS on foreign transactions.
Example
You remit ₹15 lakh in FY 2026-27 to buy US shares. The first ₹10 lakh attracts no TCS; the remaining ₹5 lakh attracts 20% — ₹1 lakh — which you claim back against your tax when you file. If the same ₹15 lakh were for your child’s tuition from your own funds, TCS would be 2% of ₹5 lakh, or ₹10,000.
How to remit under LRS
- Choose your AD bank and the purpose of remittance.
- Submit Form A2 and an LRS declaration confirming you are within the USD 250,000 limit.
- Provide PAN and supporting documents (for example, a university invoice for education).
- The bank applies TCS where applicable and processes the transfer.
Don’t forget foreign-asset reporting
If you invest abroad, disclose foreign assets and income in Schedule FA of your return. Capital gains on foreign shares are taxable in India — long-term gains (held 24 months or more) at 12.5% without indexation, short-term gains at your slab rate.
FAQs
What is the LRS limit per year? USD 250,000 per financial year per resident individual, including minors.
Is there TCS below ₹10 lakh? No, except on overseas tour packages, which attract 2% from the first rupee from 1 April 2026.
What is the TCS on education and medical remittances now? 2% on the amount above ₹10 lakh in FY 2026-27 (down from 5%), and nil if education is funded by a loan from a financial institution.
Can I get the TCS back? Yes. TCS is adjusted against your income-tax liability and refunded if excess when you file.
Which section covers TCS on LRS now? Section 394 of the Income-tax Act 2025, which replaced Section 206C(1G) of the 1961 Act from 1 April 2026.
Sources
- RBI Master Direction — Liberalised Remittance Scheme (USD 250,000 limit).
- Finance Act 2026 and CBDT FAQs on Budget 2026 — TCS rate changes effective 1 April 2026.
- Income-tax Act 2025, Section 394 — tax collection at source.
- Schedule FA, ITR — disclosure of foreign assets.
