The Liberalised Remittance Scheme (LRS) lets every resident individual in India, including minors, send up to $250,000 abroad each financial year (April to March) for permitted purposes such as education, travel, medical treatment, investments, property, family maintenance and gifts. Remittances up to ₹10 lakh a year attract no TCS. Above that, TCS is 2% for education and medical treatment and 20% for most other purposes, and overseas tour packages attract 2% from the first rupee.
This guide covers the LRS limit, what you can and cannot send money for, the TCS rates from 1 April 2026, and the mistakes that cause problems with your bank or your tax return.
What changed in LRS for 2026?
The $250,000 limit has not changed. What changed from 1 April 2026 is the TCS that banks collect, under section 394 of the Income-tax Act 2025 as amended by the Finance Act 2026:
- Education and medical treatment: TCS is 2% on remittances above ₹10 lakh in the year.
- Overseas tour packages: TCS is a flat 2%, with no threshold.
- Education funded by a loan from a financial institution: no TCS.
- All other purposes, including investments, property and gifts: TCS stays at 20% above ₹10 lakh.
What is the LRS limit, and can family members pool it?
The LRS limit is $250,000 per person per financial year, according to the RBI's LRS FAQs. The scheme is for resident individuals only, not companies, partnership firms, HUFs or trusts.
- One limit across all banks: the limit covers everything you send under LRS in the year, whichever banks you use.
- No top-up once it is used: once you have used the full $250,000 in a financial year, you cannot send more under LRS that year.
- Family pooling: family members can combine their limits, as long as each of them meets the scheme's terms. For capital account remittances, such as investments or property, a family member can pool only if they are a co-owner or co-investor.
- PAN and Form A2: your PAN is mandatory for every LRS remittance, and you declare the purpose on Form A2.
Example. Suppose you and your spouse are buying a flat abroad together for $400,000. As co-owners, you can each send up to $250,000 in the same financial year, so together you can cover the purchase.
What can you send money abroad for under LRS?
Each remittance is tagged with an RBI purpose code, which you declare on Form A2. The codes below are from the RBI's list of purpose codes. Your bank shows the code that applies on its form.
| Purpose | RBI purpose code | Detailed guide |
|---|---|---|
| Investments abroad (shares, ETFs, bonds) | S0001 (equity), S0002 (debt) | LRS for investments |
| Property abroad | S0005 | LRS for property purchase |
| Education abroad | S0305 | LRS for education |
| Medical treatment abroad | S0304 | LRS for healthcare |
| Travel abroad | S0301 for business travel; your bank gives the code for personal travel | LRS for travel |
| Family maintenance | Your bank gives the code | LRS for maintenance |
| Gifts and donations | S1302 (gifts), S1303 (donations) | LRS for gifts and donations |
You can also open and hold a foreign currency account with a bank abroad for LRS remittances, without the RBI's prior approval.
What is not allowed under LRS?
The RBI's LRS FAQs list remittances that are not permitted, including:
- Margin trading: remittances for margins or margin calls to overseas exchanges or counterparties.
- Foreign exchange trading abroad.
- Lottery and gambling: buying lottery tickets or sweepstakes.
- Non-cooperative countries: remittances to countries the Financial Action Task Force (FATF) identifies as non-cooperative.
How much TCS do you pay on LRS remittances?
Your bank collects TCS (tax collected at source) when your remittances in a financial year go above the threshold. These are the rates from 1 April 2026, under section 394 of the Income-tax Act 2025:
| Purpose | TCS rate |
|---|---|
| Education funded by a loan from a financial institution | Nil |
| Education (other) or medical treatment | Nil up to ₹10 lakh, 2% above ₹10 lakh |
| Overseas tour package | 2%, with no threshold |
| Any other purpose (investments, property, gifts, travel and so on) | Nil up to ₹10 lakh, 20% above ₹10 lakh |
Paasa's TCS guide covers each rate in detail.
Example. Suppose you send ₹25 lakh abroad this financial year to invest in global ETFs, and it is your only LRS remittance.
| Item | Amount |
|---|---|
| Total remitted for investments | ₹25,00,000 |
| Threshold with no TCS | ₹10,00,000 |
| Amount above the threshold | ₹15,00,000 |
| TCS at 20% | ₹3,00,000 |
The result: your bank collects ₹3 lakh as TCS, which you can claim back against your income tax
How do you claim back TCS?
TCS is not an extra tax. It is collected in advance and credited to your PAN:
- Check the credit in your annual tax statement before you file.
- Claim it in your income tax return. It is set off against your tax for the year, and any excess is refunded.
- Adjust it during the year against your advance tax or, if you are salaried, ask your employer to account for it. See Paasa's guide to adjusting TCS against advance tax.
Note: TCS covers only the remittance. The income you earn abroad, such as capital gains, dividends or rent, is taxed separately. If that income is also taxed abroad, India's tax treaties let you claim credit for the foreign tax.
What mistakes should you avoid?
- Using the wrong purpose code: for example, marking a gift as maintenance or an investment as education. This can lead to queries from your bank.
- Pooling family limits without the right ownership: for investments and property, only co-owners can pool their limits.
- Forgetting TCS in your budget: TCS is collected upfront, so plan for it when you pay fees or buy property.
- Assuming every purpose is taxed the same way: foreign shares, rental income and gifts abroad each follow different tax and reporting rules.
- Leaving out Schedule FA: foreign accounts and investments bought under LRS must be disclosed in your tax return. See Paasa's Schedule FA guide.
Conclusion
LRS lets you send up to $250,000 abroad a year, but the rules have layers: the annual limit, family pooling, purpose codes, TCS and tax reporting. Pick the right purpose code, track your remittances across banks and family members, plan for TCS upfront, and claim it back in your return.
About Paasa
Paasa is a global investing platform built for Indian and Asian investors, giving anyone direct access to stocks and ETFs across the US, UK, Europe and Asia. Paasa does not process tuition, travel or property payments, but its team regularly helps investors and families structure LRS remittances correctly.
- LRS built in: fund your global investments under LRS, with help choosing the right purpose code and documents.
- TCS and tax reporting: India-ready tax reports for capital gains, dividends and Schedule FA, with TCS tracking.
- One account for global markets: invest in the US, UK, Europe and Asia, including UCITS ETFs. Read how to invest in US stocks from India to get started.
