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TCS on Foreign Remittance (LRS)
Banks and forex providers collect TCS when you remit money abroad under the Liberalised Remittance Scheme. Rates vary by purpose — and the ₹7 lakh threshold is per individual per FY across most purposes.
To track ₹7 lakh threshold across the financial year.
TCS is refundable — claim as credit in your ITR.
Rate table (Oct 2023 onwards)
- Education via loan: 0.5% on amount above ₹7L.
- Education self-funded: 5% on amount above ₹7L.
- Medical treatment: 5% on amount above ₹7L.
- Overseas tour package: 5% up to ₹7L (per FY), 20% above.
- Investment, gift, other: 20% on amount above ₹7L.
Is TCS a cost?
No — TCS is refundable. It shows up as a credit in your Form 26AS / AIS and you can claim it against your income tax liability when filing ITR (or get a refund if no liability). It's a cashflow hit, not a permanent loss.
Common scenarios
- Sending child for MS in US ($60k tuition): ₹50L education-self → ₹2.15L TCS at 5%.
- Same with education loan from Indian bank: only ₹21,500 TCS at 0.5%.
- Buying $5k of US stocks: ~₹4.2L → no TCS (under threshold).
- Europe family tour ₹10L: ₹35,000 TCS (5% × 7L) + ₹60,000 (20% × 3L) = ₹95,000.
FAQ
Is TCS a tax I lose forever?
No, it is fully refundable. TCS appears as a credit in your AIS / Form 26AS, just like TDS. When filing your ITR, claim it against your tax liability — get a refund if no liability.
Does TCS apply to USD stocks I buy via Indian brokers?
Yes — investing in US stocks (Vested, INDmoney, etc.) counts as "investment" under LRS. Above the ₹7 lakh annual threshold, 20% TCS is collected by the broker / bank.
How do banks know my cumulative LRS spend across institutions?
They don't — each bank tracks only its own remittances. You're technically supposed to declare prior LRS spend to your remitting bank. In practice, the IT department reconciles via your AIS at the end of the year.