Last reviewed: 25 September 2026. Sending money abroad for study, travel, medical care, family support or investment? Since FY 2025-26 the TCS-free limit under the Liberalised Remittance Scheme has been Rs 10 lakh, and from 1 April 2026 the Finance Act 2026 cut the rate for education, medical and overseas tour packages to 2%. For remittances from 1 April 2026 the provision is section 394(1) of the Income-tax Act, 2025 (old 206C(1G)). This guide explains what the LRS covers, exactly when TCS applies and at what rate, how the cumulative limit works, and how to recover the TCS in your return.
At a glance
Rate table (FY 2026-27, from 1 April 2026)
Section 394(1) of the Income-tax Act, 2025 (old 206C(1G)), as amended by the Finance Act 2026.
| Purpose | Up to Rs 10 lakh | Above Rs 10 lakh |
|---|---|---|
| Education - funded by loan from a financial institution | Nil | Nil |
| Education - self funded | Nil | 2% |
| Medical treatment | Nil | 2% |
| Overseas tour package | 2% | 2% |
| Investment / gifts / maintenance / other | Nil | 20% |
Rate table (FY 2025-26, for reference)
| Purpose | Up to Rs 10 lakh | Above Rs 10 lakh |
|---|---|---|
| Education - loan funded (80E) | Nil | Nil |
| Education - self funded | Nil | 5% |
| Medical treatment | Nil | 5% |
| Overseas tour package | 5% | 20% |
| Investment / gifts / maintenance / other | Nil | 20% |
Worked example (FY 2026-27)
Ms A remits Rs 15 lakh in FY 2026-27 for her child's self-funded university fees. TCS is 2% on the Rs 5 lakh above the threshold, i.e. Rs 10,000. Had the same Rs 15 lakh been remitted for an overseas investment, TCS would be 20% of Rs 5 lakh, i.e. Rs 1,00,000. A Rs 3 lakh overseas tour package booked in the same year attracts 2% from the first rupee, i.e. Rs 6,000. All of it is credited against her income tax for the year.
How the limit and collection work
The Rs 10 lakh threshold is cumulative across all purposes in a financial year, and the bank or authorised dealer collects the TCS at the time of remittance once you cross it. The overall LRS ceiling remains USD 2,50,000 per year for permitted purposes.
How to recover the TCS
TCS is not a cost - it is an advance tax in your name. It reflects in your Form 26AS / AIS and is claimed in your income tax return, either reducing your tax payable or coming back as a refund. Keep the TCS certificate from your bank.
Plan large remittances
- Track total LRS remittances across all banks so you know when you cross Rs 10 lakh.
- For education, a loan from a financial institution (section 129, old 80E) removes TCS entirely.
- Remember that Form 15CA/15CB may separately apply to the same remittance.
Frequently asked questions
Is there TCS on money sent abroad under LRS?
Yes, but only above a threshold. Since FY 2025-26 there is no TCS on the first Rs 10 lakh of remittances in a year under the Liberalised Remittance Scheme (raised from Rs 7 lakh). Above Rs 10 lakh, TCS applies depending on the purpose. From 1 April 2026 the provision is section 394(1) of the Income-tax Act, 2025 (old 206C(1G)). Overseas tour packages are the exception: they attract 2% from the first rupee.
What is the Liberalised Remittance Scheme?
The LRS lets a resident individual remit up to USD 2,50,000 per financial year abroad for permitted purposes such as education, travel, medical treatment, maintenance of relatives and investment, without prior RBI approval.
What are the TCS rates above Rs 10 lakh?
For FY 2026-27, under section 394(1) (old 206C(1G)) as amended by the Finance Act 2026: investment, gifts, maintenance and other purposes attract 20% on the amount above Rs 10 lakh; self-funded education and medical remittances attract 2% above Rs 10 lakh; education funded by a loan from a financial institution is nil. Overseas tour packages attract a flat 2% with no threshold. For FY 2025-26 the education/medical rate was 5%, and tour packages were 5% up to Rs 10 lakh and 20% beyond.
Is education-related remittance taxed?
If the education remittance is funded by a loan from a financial institution (as defined for section 129, old Section 80E), TCS is nil. Self-funded education above Rs 10 lakh attracts 2% from 1 April 2026 (5% in FY 2025-26).
How is the Rs 10 lakh limit applied?
It is cumulative across all purposes in a financial year, not per transaction or per purpose. Your bank or authorised dealer tracks it and collects TCS once you cross Rs 10 lakh.
Can I recover the TCS that is collected?
Yes. TCS is not an extra tax - it is credited against your income tax liability. You can claim it in your ITR as a refund if your tax is lower, or adjust it against advance tax.
Where does the TCS reflect for me to claim it?
The collected TCS appears in your Form 26AS and Annual Information Statement (AIS), from where it is claimed in your income tax return.
Does TCS apply to overseas tour packages?
Yes. From 1 April 2026 an overseas tour programme package attracts a flat 2% TCS from the first rupee, with no threshold, under section 394(1) (old 206C(1G)). In FY 2025-26 the rate was 5% up to Rs 10 lakh and 20% beyond.
Is TCS deducted on international credit card spends abroad?
Spending on an international credit card while overseas is presently outside the LRS for TCS purposes, but remittances and forex loading under LRS are covered. Rules here have changed before, so confirm the current position for large spends.
How does this connect with Form 15CA and 15CB?
For certain foreign remittances you also need Form 15CA (and 15CB from a CA) to confirm the tax position. TCS under LRS and the 15CA/CB process are separate compliances that often apply to the same transaction.
We help you plan remittances, apply the correct TCS, and reconcile it with Form 15CA/CB and your ITR.
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