TCS on foreign remittances under LRS

Strategic Planning can help avoid TCS on foreign remittances and avoid cash flow issues

- JIGAR MUKESH PATEL

TCS on Foreign Remittances under LRS Section 206C(1G) of the Income-tax Act mandates Tax Collected at Source (TCS) on foreign remittances made by resident individuals under the Liberalized Remittance Scheme (LRS) for various purposes, within the overall annual limit of USD 250,000. The specific rates and thresholds for TCS depend on the purpose of the remittance.

Remittances for Education Abroad Effective 1st April, 2025, no TCS is applicable on remittances for foreign education, where such remittance is out of a loan taken from a specified financial institution covered under Section 80E. The aforesaid exemption is applicable irrespective of the amount of remittance.

However, it needs to be borne in mind that if the remittance is out of self-funds of the individual or is not financed by loan from specified financial institution, TCS shall be applicable at a concessional rate of 5%, on the amount exceeding Rs. 10 lakhs.