LRS Limit and TCS in 2026: The Rules for Sending Money Abroad from India

Short answer: under the Liberalised Remittance Scheme (LRS), every resident individual can send up to USD 250,000 abroad each financial year (April to March). Banks collect TCS above ₹10 lakh a year: 2% for education and medical costs, nil for education funded by a loan from a financial institution, and 20% for investments, gifts and most other purposes. A ₹50 lakh sub-limit has been reported, not announced.

Key points

• The LRS limit is USD 250,000 per resident individual per financial year, for current and capital account payments combined.
• PAN and a Form A2 declaration of purpose are needed for every LRS remittance.
• From 1 April 2026, TCS is nil on the first ₹10 lakh a year. Above that it is 2% for education and medical costs, nil for education paid by a loan from a financial institution, and 20% for investments, gifts and other purposes.
• Overseas tour packages carry 2% TCS from the first rupee.
• TCS is credited against your income tax. Any excess is refunded when your return is processed.
• On 27 October 2026, Zee Business reported that the RBI has proposed a ₹50 lakh sub-limit for some payments. The RBI has not published any rule.

What is the LRS limit in 2026?

The RBI's LRS FAQs set the rule: all resident individuals, including minors, may freely send up to USD 250,000 per financial year for any permitted current or capital account transaction, or a mix of both. The year runs from 1 April to 31 March.

The limit belongs to each person. Family members can combine their remittances for a shared purpose, such as one child's university fees, as long as each of them meets the conditions of the scheme. For investments abroad, the RBI allows clubbing only where the family members are co-owners of the investment.

The scheme is for individuals only. Companies, partnership firms, HUFs and trusts cannot use it.

What can you use LRS for?

Most everyday reasons to send money abroad are covered:

• Travel, including business trips and pilgrimages
• University fees and living costs for studies abroad
• Medical treatment abroad
• Gifts and support for relatives living abroad
• Buying foreign shares, bonds and other permitted investments
• Buying property abroad

Some payments are never allowed under LRS. They include lottery tickets and sweepstakes, margin payments to overseas exchanges, trading in foreign exchange abroad, and capital account payments to countries the Financial Action Task Force lists as non-cooperative.

Two rules catch people out. Foreign currency bought under LRS and not used must be brought back to India and surrendered within 180 days. And income earned on investments made under LRS can be kept and reinvested abroad, but it should be tracked and reported correctly in your Indian tax return.

How much TCS do you pay on money sent abroad?

TCS (tax collected at source) is collected by your bank or forex dealer when you send money. Under section 394 of the Income-tax Act 2025, the rates from 1 April 2026 are below. The ₹10 lakh threshold counts all your LRS payments in the year together. The Union Budget on 1 February 2026 cut the rate for education and medical costs from 5% to 2%, as reported by Business Standard.

Purpose of the payment	Up to ₹10 lakh a year	Above ₹10 lakh a year
Education paid by a loan from a financial institution	Nil	Nil
Education (self-funded) or medical treatment	Nil	2%
Investments, gifts, travel and other purposes	Nil	20%
Overseas tour package bought from a tour operator	2%	2%

A worked example: a parent sends ₹25 lakh in the year as a gift to a child abroad. No TCS is collected on the first ₹10 lakh. On the next ₹15 lakh, 20% is collected, which is ₹3 lakh.

Is TCS an extra tax?

No. TCS is an advance collection, not a final tax. It shows in your annual tax statement and is set against your income tax when you file your return. If the TCS is more than the tax you owe, the excess is refunded once the return is processed.

It still affects cash flow. Money collected in April may not come back until the following year. That is why large transfers are worth planning: who sends the money, for what purpose and in which year.

What is the reported ₹50 lakh LRS sub-limit?

On 27 October 2026, Zee Business reported, citing unnamed sources, that the RBI has proposed a ₹50 lakh yearly sub-limit for certain payments under LRS to slow dollar outflows. According to the report, as summarised by Outlook Money on 29 October, business travel and pilgrimages may fall under the sub-limit, education and medical costs are likely to stay outside it, and the sub-limit would sit within the overall USD 250,000 limit.

Reports differ on whether investing abroad would be affected. As of 31 October 2026, the RBI has not published a circular, draft or start date. Until it does, the rules above continue to apply.

What should you do now?

1. Do not rush transfers on a report. A rule change comes through an RBI circular. Moving money early in a hurry can mean extra TCS and paperwork for nothing.
2. Add up what you have sent since 1 April 2026. Both the USD 250,000 limit and the ₹10 lakh TCS threshold count from that date.
3. Declare the right purpose. The purpose on Form A2 decides the TCS rate and how the payment is reported.
4. Keep the paper trail. Keep fee invoices, medical bills and gift letters with your bank's remittance advice.
5. Report foreign assets in your return. Shares, accounts and property held abroad must be disclosed in your Indian tax return.
6. Plan large transfers with advice. For a property purchase, a family gift or an investment abroad, timing and the person sending the money both matter.

This article is general information, not advice on your situation. Rules may change; outcomes depend on your facts. Team Greenwolf.