LRS, Liberalised Remittance Scheme: $250K Limit and TCS

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.

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.