Answer

1. F

   Facts

   Every Indian resident can send up to $250,000 abroad per year under LRS. But from October 2023, a 20% Tax Collected at Source (TCS) applies on remittances above ₹7L (except education loans). That's ₹4L TCS on ₹20L sent abroad. You can claim it back in ITR, but it's a cash flow hit. Plan ahead.

2. P

   Provisions and law

   • Sec 394 (old 206C(1G)), TCS
3. A

   Analysis

   The 20% TCS cash flow hit: Sending ₹20L for property abroad? TCS = (₹20L − ₹7L) × 20% = ₹2.6L upfront to the bank. You get it back in ITR, but it's locked for up to 12 months. Education loan exception: Paying university fees abroad via education loan from Indian bank: 0% TCS. Paying from own funds: 5% above ₹7L. Structuring through education loan saves 5% cash flow. LRS aggregation: The ₹7L threshold is per person per FY across ALL banks combined. Sending ₹4L through HDFC and ₹4L through ICICI = ₹8L total = ₹1L taxable at 20% = ₹20,000 TCS. Banks report to IT department, no splitting benefit. Minor children: LRS applies to minors too ($250K limit per person). Parents can remit through child's LRS for education. Child's PAN used, TCS collected against child's PAN. Child claims credit in their ITR.

4. C

   Conclusion

   1. 1Determine purpose: 0% (education loan), 5% (education self/medical), 20% (all other)
   2. 2Check annual total: all LRS remittances this FY across all banks, keep below ₹7L if possible to avoid TCS
   3. 3If TCS unavoidable: budget for TCS amount at bank (bank collects it upfront)
   4. 4For education: structure via education loan (0% TCS) rather than self-finance
   5. 5Keep LRS acknowledgement slips from bank (A2 form), for ITR and FEMA records
   6. 6Claim TCS as advance tax credit in ITR, reduces final tax or generates refund

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.