LRS Limit & TCS on Foreign Remittance

Tax collected at source sits on top of that, and it is where most of the confusion is. TCS is not a tax on sending money. It is an advance payment of your own income tax, collected by the bank and credited to your PAN. You get it back.

What counts inside the LRS limit, and what does not?

Does a credit card used abroad count against your LRS limit?

No, when you are physically outside India. The RBI is explicit: “The LRS limit shall not apply to the use of ICC for making payment by a person towards meeting expenses while such person is on a visit outside India.”

Debit cards are treated differently. The same FAQ says the usage of international debit cards “shall be within the LRS limit”. Store value cards, charge cards and smart cards are also “subject to the LRS limit”. So a forex prepaid card load consumes your headroom. A credit card swipe on holiday does not.

That is a real planning point for anyone close to the ceiling. It also affects tax, because TCS attaches to remittances rather than to overseas card spends made while travelling. Our page on the best credit cards for international spends works through the cost side, and forex cards covers the prepaid route.

How TCS on foreign remittance actually works

The structure has three parts, and they have been stable even as the numbers changed.

First, a threshold. TCS applies only to the amount you remit above a fixed figure in a financial year. Below it, nothing is collected.

Second, a rate that depends on the purpose. Education and medical remittances are taxed more lightly than general travel or investment. Education funded by an education loan is treated most favourably of all.

Third, aggregation at PAN level. Your bank tracks the total across all your remittances, not per transaction and not per account. Splitting a transfer across two banks does not avoid it.

Why this page does not print a TCS rate table

Because we could not verify one against a primary source on the day of writing, and the numbers have moved in three consecutive Finance Acts.

The problem is easy to demonstrate. A major bank’s own live TCS page still states a ₹7,00,000 threshold and cites section 206C(1G) of the Income-tax Act, 1961. Other bank notices refer to a ₹10,00,000 threshold and to the Income-tax Act, 2025, which took effect on 1 April 2026 and renumbered the provision. Those cannot both be current. Printing either would put a wrong number in front of someone about to move a large sum.

So do this instead. Ask your bank, before you remit, for three things in writing: the threshold it is applying for this financial year, the rate for your stated purpose, and the section it is collecting under. Every authorised dealer has to state this on the remittance form. Then check the figure it deducts on the TCS on remittance calculator, which carries the rates we hold.

How do you get TCS money back?

Three routes, and most people only know the slowest one.

Against your salary TDS. Declare the TCS to your employer using Form 12BAA. Your employer then reduces the tax deducted from your salary. This is the fastest route, because the money returns during the same year.

As a credit in your return. The TCS appears against your PAN in Form 26AS and the Annual Information Statement. Claim it as a credit when you file, and it reduces your total tax liability rupee for rupee. Check the entry before filing — see Form 16 and 26AS.

As a refund. If the credit exceeds what you owe, the balance is refunded after your return is processed. This is the slow route, and it is why people wrongly call TCS a cost.

One condition governs all three. Give your PAN when you remit. Without it, the collection is made at a higher rate and the credit does not attach to you.

The two mistakes that cost real money

Sending in someone else’s name to stay under the threshold is the first. The limit is per individual and monitored at PAN level. Structuring transfers to dodge it is a reporting problem, not a saving.

Forgetting the currency is the second. The limit is in dollars, but you pay in rupees at your bank’s rate, not the mid-market rate. The gap is the bank’s margin, and it is usually larger than any TCS you will later reclaim. Students moving fees abroad are the most exposed to this — see the student forex guide and our comparison of remittance services.