LRS Updates 2025: Save on TCS for Overseas Remittances

May 14, 2025

Sending Money Abroad Just Got Easier: LRS Updates & How They Impact You

India's Liberalised Remittance Scheme (LRS) is a popular tool for residents looking to send money abroad. Whether it's for education, medical treatment, supporting family overseas, or simply traveling, the LRS allows you to transfer up to US$ 250,000 per financial year for various permissible purposes. But did you know that recent updates to the scheme have made sending money abroad even more convenient and cost-effective?

LRS Updates: A Boost for Remittances:

The government has made some significant changes to the Tax Collected at Source (TCS) on LRS remittances, effective April 1, 2025. The threshold for TCS has been increased from ₹7 lakh to ₹10 lakh. This means you can send more money abroad before TCS kicks in, saving you money and simplifying your financial planning.

How These Changes Affect You:

Let's break down how this new threshold impacts different purposes:

  • LRS for education financed by a Loan: Before April 1, 2025, TCS was Nil up to ₹7 lakh and 0.5% above ₹7 lakh. However, after April 1, 2025, no TCS is applicable on remittances for education funded by loans, regardless of the amount.

    • Example: Imagine you take an Education Loan of ₹15 lakh to fund your child's studies abroad. You will not have to pay any TCS.

  • LRS for Medical Treatment/Education (Other than financed by a Loan): Before April 1, 2025, TCS was Nil up to ₹7 lakh and 5% above ₹7 lakh. However, after April 1, 2025, it is Nil up to ₹10 lakh and 5% above ₹10 lakh.

    • Example: You need to send ₹12 lakh for your parent's medical treatment abroad. You will not have to pay any TCS.

  • LRS for other purposes: Before April 1, 2025, TCS was Nil up to ₹7 lakh and 20% above ₹7 lakh. However, after April 1, 2025, the TCS is Nil up to ₹10 lakh and 20% above ₹10 lakh.

    • Example: You want to send ₹15 lakh to your relatives abroad. You will only be liable for TCS on ₹5 lakh (₹15 lakh - ₹10 lakh), which would be ₹1 lakh (20% of ₹5 lakh).

The Takeaway:

These updates are a welcome relief for those sending money abroad. The increased threshold for TCS makes LRS even more attractive and accessible, empowering you to manage your finances with greater ease and control.

Remember to always check with your bank or a financial advisor for the latest information and guidelines regarding LRS and TCS.



Note: Above details are meant for generalized situations and shall not be used as a legal basis for any particular situation readers may have. We do provide tax consultations for specific scenarios and can be reached through our contact us form.



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