GIFT City Funds
With a resident account you can’t just make a free-form bank transfer to send money abroad. It’s a scheme with a dollar limit, a purpose code and a tax collection rule. To understand remittance under LRS you need to know who can send, how much, at what TCS rate and through whom.
This guide covers the limit, eligibility, FY 2026-27 TCS, the sending process, platforms and fees.
Quick Answer Box
Under LRS, a resident individual can transfer up to USD 250,000 in a financial year for permissible purposes without the prior approval of RBI. There is a limit for minors, accessed through a guardian. LRS is not open to companies and NRIs. The TCS is applied as per the purpose, i.e., nil for eligible education loans; 2% above ₹10 lakh for self-funded education or medical treatment; 2% from first rupee on overseas tour packages; 20% above ₹10 lakh for gifts, maintenance, property and investments. Use an authorised dealer and file Form A2. Keep the TCS credit for your income-tax return.
What Is Remittance under LRS?
The RBI provides the Liberalised Remittance Scheme to enable resident individuals to buy foreign exchange and remit it abroad for specified current and capital account transactions within a prescribed annual limit.
A remittance under LRS can be:
- a SWIFT transfer to a foreign bank account
- a draft
- a load on a forex card
- purchase of notes within the separate cash cap
All of those drawings in a financial year add up against the same USD 250,000 limit.
LRS does not replace FEMA. It sits inside FEMA. Prohibited purposes stay prohibited even if the amount is small.
Who Can Remit under LRS?
Eligible:
- Individuals who are persons resident in India under FEMA
- Resident minors, with the natural guardian signing declarations
Not eligible:
- Companies, partnership firms, HUFs and trusts
- Non-resident Indians and other persons resident outside India
For LRS, residential status is as per FEMA and not as per Income-tax Act day-count used for ITR. LRS can be availed by an Indian who has returned from abroad and has become FEMA-resident. NRI is not using LRS. He is using NRE/NRO and other FEMA channels.
Each person has their own hat. To treat USD 500,000 as one pooled licence, two separate, documented remittances in two names are required.
What Are the Limits for Remittance under LRS in India?
The headline limit is USD 250,000 per resident individual per financial year (1 April to 31 March).
It is aggregate:
- across every authorised dealer
- across every currency
- across travel, education, gifts, maintenance, property, portfolio investment and other permitted uses
Frequency is not capped. The total is.
Most purposes require prior RBI approval for amounts above USD 250,000. Where a foreign university, hospital or emigration authority requires more, there is limited additional scope to move, subject to the Current Account Transaction Rules.
Forex card loads, travel notes and wire transfers have the same ceiling. Three banks don’t create three ceilings. “Dealers can see running total against PAN through RBI’s CIMS reporting.
Table 1: Financial & Technical Data Matrix – TCS on LRS (FY 2026-27)
| Purpose | TCS rate | Threshold |
| Education funded by a specified financial institution loan | Nil | None |
| Education or medical treatment, self-funded | 2% | On the amount above ₹10 lakh |
| Overseas tour package | 2% | From the first rupee |
| Other LRS uses (gift, maintenance, property, investment, general travel) | 20% | On the amount above ₹10 lakh |
The limit of ₹10 lakh is per PAN, per year and is common for education, medical, gifts and investments. That threshold is not used in tour packages. TCS collected is reflected in AIS / Form 26AS. TCS can be adjusted against tax liability of the remitter. If the remitter has enough liability or asks for a refund, it is not an additional final tax.
On the day of the transfer, confirm the rate with the dealer. Finance Acts alter the slabs.
How to Send Money Abroad Using the LRS Scheme
- Confirm FEMA residency and unused LRS headroom.
- Choose an AD Category I bank or an online platform that settles through an authorised dealer.
- Keep PAN, Aadhaar, passport if asked, and purpose papers ready (fee invoice, admission letter, hospital estimate, gift relationship proof, property contract).
- Complete Form A2 for every outward remittance. Since the July 2024 RBI circular there is no small-amount exemption.
- Check the purpose code the bank will report. The code drives TCS.
- Pay the rupee equivalent, bank charges, GST on fees and TCS if it applies.
- Save the SWIFT acknowledgement, TCS certificate and A2 copy.
Do not ask an overseas friend to pay first and “settle later.” Resident-to-non-resident value must move through banking channels.
Which Platforms Support Remittance under LRS for Indian Residents?
Authorised channels include:
- Bank apps and desks SBI YONO HDFC RemitNow ICICI Money2World Axis and Kotak online remittance HSBC and Standard Desks chartered out
- Specialist dealers and marketplaces tie-up with AD banks such as BookMyForex and other such licensed platforms
- Some fintech front-ends that still do Form A2 through a partner bank
The authorised dealer is always the legal sender. Check the partner name on the list of RBI, not only the app’s brand.
However, the documents and the TCS rules do not go away when the interface is digital.
What Fees Are Involved in Remittance under LRS through Online Services?
Costs usually stack as:
- Bank or platform processing fee (often ₹250–₹1,500 per transaction, sometimes waived online) GST on that fee
- Exchange-rate margin vs. interbank rate
- Correspondent/SWIFT charges (usually deducted from the amount received $15-30 sometimes) TCS if needed by purpose and threshold
An online specialist can quote a tighter FX margin than a branch. The cheapest screen rate is not always the lowest landed cost after SWIFT and TCS. Ask for an all-in rupee debit before you sign off.
Once gifts or investments cross ₹10 lakh, the big thing looming over fees is TCS. If you get a large investment remittance collected at 20%, it is a cash-flow event even if it gets adjusted later in the ITR.
Permitted and Prohibited Purposes
Commonly permitted:
- Pleasure and business travel
- Cost of living and studies abroad
- Health care
- Keeping close relatives
- Gifts and donations under scheme conditions
- costs of employment and emigration
- Opening a foreign currency account overseas
- Portfolio/direct investment outside China, subject to ODI/OPI rules
- Buying property abroad
- Loan to eligible NRI relative subject to FEMA conditions.
Not permitted:
- Prohibited remittances: lottery, racing and the like
- Margin trading and some speculative trading
- Purchase of Indian Companies FCCBs in the Overseas Secondary Market
- Workaround Remittance from resident to overseas account of another resident
Purpose must match documents. A “gift” code on a property booking invites a later question.
Tax and Reporting after the Transfer
The record is not just TCS. AIS shows large outward remittances. If you use LRS money to buy foreign assets, you may need to file Schedule FA. FEMA reporting for either ODI or property uses a different set of forms. TCS payment does not complete the filings.
If unused LRS funds are outside the United States, review the applicable repatriation clock for that purpose.
Risk Analysis: Eleven Remittance Errors
- Treating the family as a unit USD 250,000.
- Using NRI account for LRS transfer or vice versa.
- Divide among banks to ‘reset’ the limit.
- Choosing a gift code for investment.
- Not seeing TCS until the debit hits.
- Skipping Form A2 as the amount looks small.
- Remitter PAN not available from joint account sending.
- Just comparing the FX rate advertised.
- Making payment for a booking via an overseas contact.
- Forgot about the forex-card loads counting.
- Assuming TCS is a dead cost and not tracking the credit in AIS.
Each error is cheaper to prevent at the Form A2 stage than to compound later.
Table 2: Generic Advice vs. Strategic Thinking Matrix
| Decision Point | Generic Advice | Strategic Thinking |
| Child’s tuition | “Send from any family account” | Match remitter, LRS headroom and loan-TCS exemption |
| Gift to a sibling abroad | “It is only support” | 20% TCS above ₹10 lakh; keep relationship proof |
| App with a low USD rate | “Cheapest wins” | Add SWIFT, GST and TCS |
| Two banks | “Two limits” | One PAN, one USD 250,000 |
| Tour package | “Same as other travel” | 2% TCS from the first rupee |
| Investment abroad | “TCS is a tax loss” | Credit it in the ITR; still file FEMA/tax asset reports |
Strategic thinking separates the dollar cap, the TCS grid and the purpose file.
Closing Perspective
LRS is the legal route for a resident who needs to pay a university, support a relative or invest in FEMA. The pipe has a width of USD 250,000 a year, a purpose label and a TCS tap that opened wider or narrower depending on Budget 2026. The money will flow through banks and licensed platforms. They will report it too. Remitters that give the right code, the right remitter PAN and an all-in fee quote spend less time on notices and more time on the reason they sent the funds.
This is general information. Limits and TCS rates change. Confirm with your authorised dealer and tax adviser before a large transfer.
People Also Ask
What is remittance under LRS?
An outward foreign-exchange transfer by a resident individual under the Liberalised Remittance Scheme, counted toward the yearly USD 250,000 cap.
Who can remit under LRS?
Only persons resident in India who are individuals, including minors through a guardian. Companies, HUFs, trusts and NRIs cannot use LRS.
What is the LRS remittance limit in India?
USD 250,000 per individual per financial year across all banks and permitted purposes.
What is TCS on foreign remittance under LRS in FY 2026-27?
Nil for eligible education loans; 2% above ₹10 lakh for self-funded education or medical treatment; 2% from the first rupee on overseas tour packages; 20% above ₹10 lakh for other LRS purposes.
How do I send money abroad under LRS?
Use an AD bank or licensed platform, submit Form A2 and purpose documents, pay charges and TCS if applicable, and keep the SWIFT and tax credit records.
Which platforms support LRS remittances?
AD Category I bank apps such as RemitNow and Money2World, plus online dealers that settle through authorised banks.
What fees apply on online LRS remittances?
Processing fees, GST, FX margin, correspondent charges and, where due, TCS. TCS is usually the largest extra debit on big gift or investment transfers.
How can WealthMunshi help with LRS planning?
WealthMunshi offers tax-planning and NRI related advisory. The firm provides advisory services to those coordinating education, investment or family remittances within the TCS and FEMA limits.
A remittance is both a FEMA event and a tax event in the same debit. Readers planning a year of tuition, gifts or overseas investment can schedule a consultation to map limit, purpose and TCS cash flow prior to transfer.
