12 Jun 2026TCS on foreign remittance in India is charged at 20% on amounts above ₹10 lakh sent abroad in a financial year under the LRS, with lower rates for education and medical transfers and a flat 2% on overseas tour packages. It is not an extra tax — it is adjusted against your income tax when you file your ITR.
Updated: June 2026 | Regi Tom Antony & Associates, Chartered Accountants, Kochi
TCS (Tax Collected at Source) on foreign remittances under the Liberalised Remittance Scheme (LRS) catches many remitters off guard — particularly NRIs and residents sending money abroad for investment, education, family support or property. The Finance Act 2025 raised the TCS-free threshold from ₹7 lakh to ₹10 lakh with effect from 1 April 2025, and Budget 2026 further reduced several rates. This guide gives you the current FY 2026-27 position.
What is TCS on foreign remittance?
Under Section 206C(1G) of the Income-tax Act, banks and authorised dealers collect TCS when they process an outward foreign remittance under LRS. TCS is an advance tax credit, not a final tax — it appears in your Form 26AS and AIS, and you set it off against your total tax liability when filing your ITR. If TCS exceeds your liability, the excess is refunded. The catch is cash flow: it is collected upfront and recovered only after your return is processed. TCS applies only to outward remittances; money received from abroad is not covered.
Current TCS rates on foreign remittance (FY 2026-27)
| Purpose of LRS remittance | TCS rate (FY 2026-27) |
|---|---|
| Education — funded by loan from a financial institution (Sec 80E) | NIL |
| Education / Medical treatment — self-funded | Nil up to ₹10 lakh; 2% above ₹10 lakh |
| Overseas tour packages | 2% (no threshold) |
| Any other purpose — investment, gifts, family maintenance, property, bank transfers | Nil up to ₹10 lakh; 20% above ₹10 lakh |
| International credit-card spends abroad | Currently outside LRS / deferred — confirm each year |
Note: the education-loan TCS provision has been removed — remittances for education financed by an eligible loan are fully exempt.
How does the ₹10 lakh threshold work?
The ₹10 lakh limit is per individual, per financial year, aggregated across all your non-tour-package LRS remittances combined — not per bank and not per transaction. Each bank asks for a self-declaration of your year-to-date LRS usage; that declaration is your responsibility. If you remit ₹6 lakh through one bank and ₹6 lakh through another in the same year, the combined ₹12 lakh crosses the threshold and 20% TCS applies on the excess ₹2 lakh — even though neither bank individually crossed ₹10 lakh.
Example: 20% TCS on a ₹13 lakh overseas investment
Suppose you remit ₹13 lakh abroad to invest in a foreign asset. TCS at 20% applies only on the amount above ₹10 lakh, i.e. on ₹3 lakh. The bank collects ₹60,000 (20% of ₹3 lakh) as TCS, and you remit a total of ₹13,60,000. That ₹60,000 is credited to your PAN and adjusted against your tax when you file your ITR.
PAN-Aadhaar linking: rates double if not linked
Under Section 206CC/206AB, if your PAN is not linked to Aadhaar (or you are a non-filer), TCS rates are doubled — the 20% rate becomes 40%. Confirm your PAN-Aadhaar linkage is active before making any LRS remittance.
How to claim a TCS refund on foreign remittance
TCS is credited to your PAN and shown in Form 27D (the TCS certificate), Form 26AS and your AIS. When filing your ITR, report it in the TDS/TCS schedule and set it off against your total tax liability — there is no separate application; the refund is processed automatically with your return. If you do not file an ITR, the TCS is not refunded — you must file to claim it.
Planning points
- Family travel: each individual has their own ₹10 lakh threshold and tour packages are now a flat 2%, so plan bookings across family members where genuine.
- Overseas investments: track your cumulative LRS utilisation across all banks — the 20% upfront outflow above ₹10 lakh affects your cash flow even though it is fully creditable.
- NRO to NRE / repatriation: repatriation of your own funds is governed by FEMA and Form 15CA/CB, separate from LRS TCS — get this structured correctly.
Frequently asked questions
What is the TCS rate on foreign remittance in 2026?
20% on amounts above ₹10 lakh per year for general LRS remittances (investment, gifts, maintenance, property); 2% on overseas tour packages; 2% above ₹10 lakh for self-funded education/medical; and NIL for education funded by an eligible loan.
Is there TCS up to ₹10 lakh?
No. For most LRS purposes there is no TCS on the first ₹10 lakh remitted in a financial year (aggregated across all banks). TCS applies only on the amount exceeding ₹10 lakh.
Can I get the TCS back?
Yes. TCS is an advance tax credit. File your ITR, set it off against your tax liability, and any excess is refunded automatically.
Does TCS apply to money I receive from abroad?
No. Section 206C(1G) TCS applies only to outward remittances under LRS. Inward remittances are not covered.
Do NRIs pay TCS on NRO to NRE transfers?
TCS under 206C(1G) targets resident LRS remittances. NRI repatriation from NRO to NRE is governed by FEMA with Form 15CA/CB certification. Talk to our NRI tax team.
Regi Tom Antony & Associates advises on LRS compliance, TCS on foreign remittances, Form 15CA/CB for NRO repatriations, and ITR filing for TCS refunds. Related: NRI Taxation, ITR Filing, NRI Tax Representation. For NRI advisory resources visit nriblueprint.com. Contact: letstalk@rtaandassociates.com | Kakkanad, Kochi.