RBI LRS Limit and TCS Rules 2026: What Indians Need to Know Before Going Abroad
By Kabir Malhotra (Kabir Malhotra writes about how Indian travel buyers actually pay — UPI vs credit card vs forex card surcharges, reward-point math on the top travel credit cards, RBI tokenisation, EMI-on-flights and the small fees that compound across a year of bookings.) · Published · 14 min read
RBI's Liberalised Remittance Scheme lets a resident remit up to USD 250,000 per year for permitted purposes — travel, education, medical, investment, gift. The 2024 Budget changed TCS to 20% on most forex above INR 7 lakh. Permitted purposes, banned uses, Form A2, claiming refund.
What the Liberalised Remittance Scheme actually permits
The Liberalised Remittance Scheme (LRS) was introduced by the Reserve Bank of India in February 2004 to allow resident individuals to remit foreign currency abroad for permitted current and capital account transactions, up to a per-financial-year limit. The current LRS limit is USD 250,000 per resident individual per financial year (April to March), unchanged since the 2015 enhancement. The scheme is codified in the FEMA (Current Account Transactions) Rules, 2000 and the FEMA (Permissible Capital Account Transactions) Regulations, 2000, with the operational mechanics in the RBI's Master Direction on Liberalised Remittance Scheme.
"Resident individual" under LRS means a person resident in India under Section 2(v) of the FEMA Act, 1999 — generally, someone who has been in India for more than 182 days in the preceding financial year. NRIs and OCIs who are physically resident outside India for more than 182 days are NOT residents for FEMA and therefore not eligible for LRS — they have a separate framework (NRE / NRO / FCNR accounts and Schedule III repatriation rules).
The USD 250,000 cap is per individual per financial year, not per household. A family of four (two parents, two children) can collectively remit USD 1 million in a year if each member uses their full quota. Minor children's LRS quota is operated by the parent / guardian. The cap is consolidated across all permissible purposes — if you remit USD 200,000 for a property investment in February, you have only USD 50,000 left in that financial year for any other purpose.
This guide walks through the permissible and prohibited purposes, the 20% TCS structure introduced by the 2023-24 Finance Acts, how TCS appears on your wire transfers and your forex card spending, and how to claim TCS refund or set-off against advance tax. Tax and regulatory rules change frequently. Always verify with your CA, your authorised dealer bank, or the RBI master direction for the current financial year before remitting.
Permitted purposes under LRS — what you can use it for
The RBI Master Direction lists the following purposes for which LRS remittance is permitted:
Private visits abroad. Tourism, holidays, family visits — except to Nepal and Bhutan, where no LRS approval is needed because the rupee is freely accepted. Foreign exchange for travel is the most common use of LRS by Indian residents.
Gift or donation. Gifts to non-resident relatives, donations to overseas charitable organisations (subject to FCRA rules for the recipient if Indian, but FCRA does not affect the giver's LRS quota).
Going abroad for employment. Initial expenses when relocating for a foreign job — apartment deposit, transit costs, family travel.
Emigration. One-time emigration-related expenses if you are permanently relocating abroad. Some authorised dealers permit higher one-time amounts (subject to RBI approval) for emigration.
Maintenance of close relatives abroad. Routine support to a non-resident relative — typically spouse, parent or child living abroad. Subject to the USD 250,000 annual cap.
Travel for business. Subject to limits depending on the employer's authorisation (and on whether the business travel is being paid for by the employer outside of LRS via Form A2 of a different category).
Medical treatment abroad. Self or close relatives. Carries a special exemption from TCS up to INR 7 lakh per financial year per recipient.
Studies abroad. Tuition fees, hostel, books, living expenses. Has a favourable TCS structure: 5% TCS on amounts above INR 7 lakh if funded via an education loan (the 5% becomes 0.5% on loans up to INR 7L from a financial institution under Section 80E loan rules), or 5% if from your own funds up to specified thresholds.
Investment abroad — direct equity, debt, mutual funds, real estate. The big category. LRS is the legal route for resident Indians to buy shares of Apple, Tesla, Amazon, ETFs like VOO and QQQ, foreign mutual funds, foreign government bonds, and overseas residential / commercial property. Subject to the USD 250,000 annual cap and any additional sector-specific RBI restrictions.
Acquisition of immovable property abroad. Holiday home in Dubai, apartment in London, condo in Singapore — permitted. The property purchase amount counts toward the USD 250,000 annual cap, so most property purchases require multi-year LRS planning (or financing through the foreign bank, with only the down payment via LRS).
Prohibited purposes — what LRS cannot be used for
Under Schedule I of the FEMA (Current Account Transactions) Rules, 2000, and various RBI clarifications, LRS cannot be used for:
Remittance to a Financial Action Task Force (FATF) non-cooperative country, or to a country sanctioned by the UN Security Council.
Trading in foreign exchange abroad — i.e., margin trading in FX, leveraged forex speculation. This is a hard prohibition.
Purchase of "lottery tickets, banned or proscribed magazines, sweepstakes, football pools, etc." — quoted from the FEMA Rules. Online gambling and online sports-betting deposits made via LRS-funded forex cards are technically in violation.
Remittance for margin trading or speculative purposes in foreign equity markets. Buying shares on a delivery basis is permitted; trading on margin (with leverage from a foreign broker) is not.
Remittance to acquire foreign cryptocurrencies / virtual digital assets. The RBI has consistently held that LRS does not permit the purchase of crypto from foreign exchanges. The 2023-24 Budget then made the Indian tax treatment of crypto explicit (30% flat tax + 1% TDS) but the LRS prohibition on remitting to foreign exchanges for crypto purchase remains in place per RBI's interpretation. Some Indian crypto users continue to do this via informal channels; the legal risk and the inability to bring proceeds back through banking channels makes it inadvisable.
Remittance to participate in foreign or Indian lottery, sweepstake, gambling, or game of chance. Includes online casinos.
Donation to foreign trade unions, foreign political parties, or foreign government employees.
If your authorised dealer bank suspects the LRS remittance is for a prohibited purpose, they will refuse the transaction or seek additional declarations. Misdeclaring the purpose to evade the prohibition is a FEMA violation under Section 13, with penalties up to thrice the sum involved or INR 2 lakh, plus potential prosecution.
TCS on LRS remittance — the 20% rule, the exceptions, and the math
The Tax Collected at Source (TCS) regime on LRS remittance was overhauled in the Finance Act, 2023 (and refined by the Finance Act, 2024) under Section 206C(1G) of the Income Tax Act. The TCS structure as of FY 2025-26 (which applies to the tax year ending 31 March 2026 and continues into FY 2026-27 unless further amended):
Foreign tour package purchased from an Indian tour operator: 5% TCS on amounts up to INR 7 lakh per financial year, 20% TCS on the portion above INR 7 lakh.
Education-related LRS remittance (tuition, hostel, etc.) — funded by your own money: 5% TCS on the portion above INR 7 lakh per financial year. Up to INR 7 lakh, zero TCS.
Education-related LRS remittance — funded by an education loan from a notified Indian financial institution under Section 80E: 0.5% TCS on the portion above INR 7 lakh per financial year. Up to INR 7 lakh, zero TCS.
Medical treatment-related LRS remittance: 5% TCS on the portion above INR 7 lakh per financial year. Up to INR 7 lakh, zero TCS.
Any other LRS remittance — travel for leisure, investment abroad, gift, maintenance of relatives, property purchase: 20% TCS on the portion above INR 7 lakh per financial year. Up to INR 7 lakh, zero TCS.
The INR 7 lakh threshold is per individual per financial year and applies across all LRS purposes combined (with the favourable rates above kicking in for the specific category). The 20% TCS is computed only on the excess above INR 7 lakh, not on the entire amount.
Worked example. A resident remits USD 100,000 (approximately INR 83 lakh at INR 83 per USD) in a financial year for a Dubai property down payment under LRS investment route. INR 7 lakh is exempt, the remaining INR 76 lakh attracts 20% TCS = INR 15.2 lakh withheld by the bank at the time of the remittance. The bank pays this to the Income Tax Department on the remitter's PAN. The remitter sees this credit in Form 26AS and can claim it as advance tax in the income tax return for that financial year — set off against tax liability, with any excess refundable.
The TCS is not an additional tax — it is an upfront collection that you reconcile on your ITR. If your tax liability for the year (say, INR 8 lakh on salary income) is less than the TCS collected (say, INR 15.2 lakh), you get a refund of INR 7.2 lakh on filing the ITR. The bank does not give you the refund; the Income Tax Department does, after ITR processing — typically 3-6 months from filing.
TCS on forex cards, international debit cards and international credit cards
The TCS rules apply to LRS-route remittances. International debit cards and forex cards (which draw on your LRS quota) attract TCS in the same way as outward wire transfers. International credit cards have had a more complex treatment.
Forex cards. When you load INR onto a forex card (Niyo Global, BookMyForex, Thomas Cook, ICICI Multi-currency, HDFC ISIC, Axis Forex Card, etc.) for international spending, the load is treated as an LRS transaction. If the cumulative load in a financial year exceeds INR 7 lakh, the issuer collects 20% TCS at the point of subsequent loads above that threshold. You pay the TCS at load time; you reconcile at ITR time.
International debit cards drawing on a domestic savings account. When you swipe a debit card abroad and the merchant settles in foreign currency, your bank converts INR from your savings account at the prevailing rate plus markup. This is an LRS transaction; the bank tracks cumulative usage in the financial year and applies 20% TCS above INR 7 lakh. The TCS is withheld from the next debit settlement.
International credit cards used abroad. The Finance Act, 2023, originally brought international credit card spending under LRS — meaning credit-card swipes abroad would have counted against your USD 250,000 cap and attracted 20% TCS above INR 7 lakh. The Ministry of Finance subsequently clarified (May 2023) that international credit card spending was being kept outside LRS for now (no Section 5 of FEMA notification was issued), so 20% TCS does not currently apply on routine international credit card use. This is administrative forbearance, not statutory exemption — the position could change in a future Budget. As of the FY 2025-26 position, international credit card spending abroad is outside LRS and outside the TCS net for that channel.
The practical implication: forex cards and international debit cards trigger TCS above INR 7 lakh load / spend per year; credit cards (as of May 2026) do not. For high-spending travellers, this makes credit cards meaningfully more cash-flow-friendly for international spending — you do not have 20% locked up with the Income Tax Department awaiting refund. The forex markup on credit cards (typically 2-3.5%) is the cost you pay for that cash-flow benefit.
The exception worth knowing. If your bank's LRS-tracking software erroneously applies 20% TCS to a credit card transaction (mis-flagged because the merchant code looked like a forex purchase), get the bank to correct it. The TCS once collected is on your PAN and you have to claim refund via ITR — you cannot get the bank to reverse it directly.
Form A2, Form 15CA / 15CB and the paperwork for outward remittance
Every LRS remittance requires the resident to file Form A2 with the authorised dealer bank executing the wire. Form A2 is the LRS application: name, PAN, purpose of remittance, amount, recipient details, declaration of compliance with FEMA. Banks have largely digitised Form A2 — fill it on the bank's online platform when initiating the wire.
For LRS remittances that involve transferring out funds in any taxable category, Form 15CA is also required — this is the Income Tax Department's online declaration that tax has been deducted (or that no tax was deductible). For remittances above INR 5 lakh in a single transaction or above specified annual thresholds for certain categories, Form 15CB — a certificate from a Chartered Accountant — is required in addition.
The 15CA / 15CB pair is mandatory for many LRS purposes including investment, property purchase, gift, and maintenance. For pure tourism / forex card loading, the bank usually handles the documentation internally; you fill Form A2 and that is it from your side. For larger investment or property transactions, plan ahead: a CA cannot issue 15CB on the same day in most cases — budget 2-5 working days for the CA, and another 1-2 days for the bank to process the wire after 15CA / 15CB upload.
Annual reporting. Some categories of LRS remittance (notably overseas direct investment in equity / debt of foreign companies) require annual reporting to the RBI via Form ODI / FLA. If you bought a US stock through an Indian-LRS-route platform like INDmoney, Vested, or Stockal, the platform typically handles the reporting on your behalf. If you maintain a direct foreign brokerage account funded via LRS, the reporting obligation falls on you and is non-trivial. Consult a CA.
Annual Information Statement (AIS). Your LRS remittances and TCS collected appear in your AIS on the Income Tax portal. When filing your ITR, cross-check the AIS — any TCS collected by banks is auto-populated in your tax credit summary, but errors happen. The AIS also shows the LRS amount under "Outward Foreign Remittance" — a useful self-check that you have not crossed USD 250,000 in the financial year.
Claiming TCS — set off against advance tax or claim refund
TCS collected by banks on your LRS remittance is not a tax in itself — it is a withholding that you reconcile on your annual income tax return. You have two practical paths:
Path 1 — Set off against advance tax obligation. If you have an advance tax liability for the financial year (typical for self-employed, business owners, professionals, and salaried with significant interest / capital gains income), your TCS payments count as tax already paid and reduce your advance tax obligation. Example: you have an advance tax obligation of INR 10 lakh for the year. You have INR 15.2 lakh of TCS from a Dubai property remittance. You owe zero additional advance tax for the year, and you have INR 5.2 lakh of excess TCS waiting to be refunded after ITR filing.
Path 2 — Claim refund via ITR. If you do not have advance tax obligations (salaried with TDS handling your liability, no business income, no large investment income), the TCS sits as a credit against the year's total tax payable. If TCS exceeds your liability, the excess is refunded after ITR processing. Refund timeline varies — 30 days to 6 months from ITR processing, depending on how quickly the CPC at Bengaluru reviews your return.
The cash-flow cost of TCS is real. If you remit USD 100,000 for a Dubai property in April 2026, the INR 15.2 lakh sits with the Income Tax Department until you file the ITR for FY 2026-27 (between April 2027 and July 2027), get it processed (August-November 2027), and receive the refund (typically October 2027-March 2028). That is 18-24 months between paying the TCS and getting the refund — meaningful for property investors and large remitters.
The legal workarounds: quarterly advance tax planning to use up TCS quickly via set-off rather than waiting for refund; spread the remittance across financial years (e.g., USD 200,000 in March and USD 200,000 in April of a single property purchase, falling into two financial years and using two INR 7 lakh exemptions); structure foreign investments via tax-efficient routes like the GIFT City IFSC where applicable. None of these are clever loopholes — they are legitimate planning options that a CA will discuss based on your specific situation.
LRS and your foreign income tax filing — the matching layer
LRS deals with the outward remittance side. The income earned on those foreign investments (US dividend, UK property rent, Singapore mutual fund capital gain) is taxable in India under the Indian tax regime applicable to resident individuals (worldwide income is taxable for residents). You also need to comply with the foreign country's tax rules — US dividends have a 25% treaty withholding for India-resident investors after submitting a W-8BEN, UK property income falls under non-resident landlord rules, and so on.
You then claim foreign tax credit in India under Section 90 / 90A / 91 of the Income Tax Act, supported by Form 67 filed online by the due date for filing the ITR (typically 31 July of the assessment year for non-audit cases). Form 67 declares the foreign income and the foreign tax paid; the credit is given to the extent of the lower of (a) tax payable in India on that income, and (b) tax paid abroad.
Schedule FA in ITR-2. Resident individuals with foreign assets (foreign bank account, foreign shares, foreign immovable property, foreign mutual funds) must disclose them in Schedule FA of the ITR. This is independent of whether income was earned during the year. Non-disclosure attracts penalties under the Black Money Act, 2015 — INR 10 lakh per undisclosed asset per year, plus potential prosecution. Disclosure is not optional and not subject to materiality thresholds; even a USD 100 balance in a US brokerage account triggers disclosure.
FATCA / CRS auto-exchange. Your US broker, UK bank, Singapore bank etc. is reporting your account details to the local tax authority, which is forwarding to the Indian Income Tax Department under the OECD CRS framework (or the US-India FATCA agreement). Non-disclosure on Schedule FA when the data already arrives in Indian systems via CRS is the easiest way to get a notice from the tax department. File honestly; the cost of disclosure is zero (it is just reporting), the cost of non-disclosure is INR 10 lakh per asset per year.
Practical pre-trip and pre-investment checklist
Before an international trip: Check your remaining LRS quota for the financial year (your bank can tell you, or compute from previous remittances yourself). If you have crossed INR 7 lakh already in the financial year via forex card / debit card loads, expect 20% TCS on further forex card top-ups. Plan the trip's forex split: load up to INR 7 lakh on forex card without TCS friction; for spending beyond that, use international credit cards (no LRS / TCS hit currently). Carry physical USD in moderate amount (USD 1,000-3,000 typical) for emergencies — the import / export limit is USD 5,000 in cash on arrival to India per RBI rules.
Before a large foreign investment: Confirm with a CA that your purpose is on the LRS permitted list. Map out the TCS impact at 20% on the amount above INR 7 lakh and the cash-flow consequence. Decide whether to spread the investment across financial years. File Form A2 with your authorised dealer bank; if the amount or category requires it, file Form 15CA online and get Form 15CB from a CA. Confirm that your foreign destination account is in your name (LRS prohibits remittance to third-party accounts in most situations). Keep all wire confirmations and contract notes for at least 8 years for tax audit purposes.
Before sending money to a foreign-resident relative: Confirm the recipient relationship qualifies as "close relative" under the Income Tax Act definition (spouse, parent, child, sibling, lineal ascendant or descendant) if you want to argue the gift is tax-free in their hands as a non-relative gift; otherwise, the recipient may have tax in their country of residence. Use the "gift / maintenance" purpose code on Form A2. Stay within USD 250,000 per remitter per financial year; if your spouse is also a resident, they can independently remit up to USD 250,000.
Before buying foreign equities: Use an Indian-LRS-compliant platform (INDmoney, Vested, IND Stockal, Groww US) or a foreign broker that accepts INR transfers via LRS-route wire (Interactive Brokers, Schwab via specific routes). The platform handles Form A2 and the foreign brokerage account setup. Confirm whether the platform handles Schedule FA / Form ODI reporting for you or whether you need to file separately. Set up a US tax withholding form (W-8BEN) at the broker to claim the India-US DTAA treaty rate (25% on dividends, vs default 30%).
Frequently asked questions
What is the LRS limit in 2026?
USD 250,000 per resident individual per financial year (April to March), unchanged since the 2015 enhancement under RBI's Master Direction on Liberalised Remittance Scheme. The cap is consolidated across all permissible purposes — travel, education, medical, investment, gift, property — and per individual, not per household. A family of four can collectively remit USD 1 million in a year if each member uses their full quota.
When does 20% TCS apply on foreign remittance?
On LRS remittance for any purpose other than education or medical above INR 7 lakh per financial year — travel, investment, property purchase, gift, maintenance of relatives. Up to INR 7 lakh is TCS-free; the 20% applies only on the excess above INR 7 lakh. Education funded from own money attracts 5% above INR 7 lakh (or 0.5% if funded by Section 80E loan). Medical attracts 5% above INR 7 lakh.
Does TCS apply on my international credit card spends abroad?
As of May 2026, no — the Ministry of Finance kept international credit card spending outside LRS via administrative clarification in May 2023, and no notification has been issued bringing it under TCS. Forex cards and international debit cards are inside LRS and do attract 20% TCS above INR 7 lakh per financial year. The credit card position is administrative forbearance, not statutory — verify the current status before assuming.
How do I claim back the TCS the bank deducted?
It is auto-populated in your Annual Information Statement and Form 26AS on the Income Tax portal under your PAN. File your ITR for the financial year; the TCS is treated as tax already paid and set off against your total liability. Excess TCS becomes a refund. If you have advance tax obligations during the year, the TCS counts against those too. Refund timeline is typically 3-6 months from ITR processing.
Can NRIs use the Liberalised Remittance Scheme?
No — LRS is only for residents of India under FEMA (typically those in India for more than 182 days in the preceding financial year). NRIs and OCIs resident outside India have a separate framework based on NRE / NRO / FCNR accounts and Schedule III repatriation rules. The NRO repatriation cap is USD 1 million per financial year, distinct from the resident LRS cap of USD 250,000.
Is cryptocurrency purchase from foreign exchanges allowed under LRS?
No — RBI's consistent position is that LRS does not permit remittance to acquire foreign cryptocurrencies or virtual digital assets. The 2023-24 Budget formalised the Indian tax treatment of crypto (30% flat tax + 1% TDS on transfers) but the LRS prohibition on remitting to foreign crypto exchanges remains in place. Doing so via informal channels carries FEMA penalties and the inability to bring proceeds back through banking channels.