TCS on LRS remittances: what changed, and what it costs you

A short, practical view of the current slab structure on LRS outflows for the average HNI family — what counts toward the ₹7 lakh threshold, what doesn't, and where the paperwork most often slips.

If you remit money out of India under the Liberalised Remittance Scheme — to fund overseas investments, buy property abroad, or transfer to a child living overseas — Tax Collected at Source applies above a per-financial-year threshold. The structure looks straightforward on paper. In practice, the questions that matter are: what counts toward the threshold, when is TCS recoverable, and what trips up most families.

The current structure, at a glance

Slab applies to general-purpose LRS remittances including overseas investment, foreign property purchase, gifts, and bank transfers to family abroad. Education and medical remittances follow lower rates. TCS is recoverable against your final income tax liability.

What counts toward the ₹7 lakh threshold

The threshold is per financial year, per remitter — not per transaction and not per recipient. Every LRS-route remittance you make in a given financial year aggregates against it. So if you send ₹5 lakh in May and ₹4 lakh in November, the second remittance has ₹2 lakh sitting above the threshold and TCS applies on that ₹2 lakh.

The aggregation includes most outflows you'd intuitively expect — investments into overseas brokerage accounts, property purchases, gifts to family abroad, transfers to your own foreign accounts. It does not include outflows that aren't routed via LRS at all (corporate remittances, NRO-to-NRE transfers within your own profile, and so on).

What most families miss

It's recoverable, not a cost. TCS is collected by the bank at the point of remittance, but it is credited against your income tax liability for the year. If your tax liability exceeds the TCS already collected, you owe the difference. If it doesn't, you get a refund. It is a working-capital drag, not a permanent leakage.

The bigger practical issue is timing. The TCS hits your bank account on the day of remittance. The credit lands when you file your return — often six to fifteen months later. For a family making large overseas investments, that gap is real money out of circulation.

Three things worth doing

One, plan the calendar. If you know you'll remit ₹50 lakh in a year, the slab structure is the same whether you do it in two tranches or twenty. But the cash-flow drag from TCS is identical either way — so optimise around when the credit lands in your tax return, not around the remittance pattern itself.

Two, keep the paperwork. Every Form 15CA / 15CB, every TCS certificate from the remitting bank, every transaction reference — file them in one place, by financial year. When you eventually claim credit in your return, your CA will need them.

Three, remember Schedule FA. TCS is a payment-side issue. Schedule FA is a reporting-side issue. They are independent. You can pay every rupee of TCS owed and still be in trouble for failing to disclose the foreign asset that the remittance funded.

The last one catches more families than the first two combined.