NEW DELHI: Finance Minister Nirmala Sitharaman, in her Budget 2025 announcement, proposed raising the threshold for Tax Collected at Source (TCS) on remittances under the RBI’s Liberalised Remittance Scheme (LRS) from Rs7 lakh to Rs10 lakh per financial year.
Additionally, she announced the removal of TCS on education-related remittances, provided the funds come from a loan taken from a specified financial institution.
Implications
The revision in the TCS threshold means that individuals remitting up to Rs10 lakh abroad in a financial year will not face any TCS deduction, compared with the earlier Rs 7 lakh limit.
This provides relief for those making smaller international transfers for travel, medical expenses, and investments.
For remittances exceeding Rs10 lakh, the existing TCS rates remain unchanged: 5 per cent for medical and education-related remittances (unless covered under an education loan); 20 per cent for foreign investments and overseas travel.
While this move reduces the tax burden on smaller transactions, the continuation of higher TCS rates on large remittances could still impact individuals sending substantial amounts abroad, particularly for foreign asset purchases, real estate, and high-value travel packages.
Liberalised remittance scheme (LRS)
The Liberalised Remittance Scheme (LRS) allows resident individuals to remit funds abroad for education, medical expenses, travel, gifting, and investments, with an annual limit of $250,000 (Rs 2.5 crore) per person. However, certain restrictions remain, including prohibitions on crypto-related transactions and remittances to FATF high-risk jurisdictions.
