Tax Collected at Source (TCS) on remittances is a tax collection mechanism introduced by the Indian government (effective October 1, 2023) under Section 206C(1G) of the Income Tax Act.…
What is TCS on Remittance?
Tax Collected at Source (TCS) on remittances is a tax collection mechanism introduced by the Indian government (effective October 1, 2023) under Section 206C(1G) of the Income Tax Act. When you send money abroad under the RBI's Liberalised Remittance Scheme (LRS), your bank or authorised dealer collects TCS from you at the time of transfer.
TCS is not an additional tax — it is an advance collection that you get back as a credit when you file your Income Tax Return (ITR). Think of it like TDS — your tax liability is calculated at the end of the year and TCS offsets what you owe.
TCS Rates on Remittances (2026)
| Purpose of Remittance | TCS Rate (above ₹7 lakh) | Example: ₹10 lakh transfer |
|---|---|---|
| Education — via loan from financial institution | 0.5% | ₹1,500 TCS collected |
| Education — self-funded (no loan) | 5% | ₹15,000 TCS collected |
| Medical treatment abroad | 5% | ₹15,000 TCS collected |
| Tourism / travel | 20% | ₹60,000 TCS collected |
| Maintenance of relatives | 20% | ₹60,000 TCS collected |
| Investment (stocks, property, etc.) | 20% | ₹60,000 TCS collected |
| Any other LRS purpose | 20% | ₹60,000 TCS collected |
Note: TCS applies only to the amount above ₹7 lakh per financial year. The first ₹7 lakh is TCS-free.
The ₹7 Lakh Threshold Explained
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The ₹7 lakh threshold is per individual, per financial year (April 1 to March 31). Here's how it works:
- All your LRS remittances are tracked cumulatively by your bank across the financial year
- TCS is collected only on the portion above ₹7 lakh
- If you split transfers across multiple banks, each bank tracks separately — you are responsible for declaring your aggregate transfers to avoid inadvertently avoiding TCS
- The ₹7 lakh threshold covers ALL purposes combined (not ₹7 lakh per purpose)
How to Claim TCS Back
Step 1: Collect your transfer documentation
Get a TCS certificate from your bank or authorized dealer for every remittance where TCS was deducted. This is similar to a TDS certificate (Form 16).
Step 2: Verify in Form 26AS / AIS
Log in to the Income Tax portal (incometax.gov.in) and check your Annual Information Statement (AIS) or Form 26AS. The TCS deducted should appear under your PAN.
Step 3: Claim credit in ITR
When filing your Income Tax Return, include the TCS amount under "Tax Credits." It will offset your total tax liability. If your TCS exceeds your tax liability, you'll receive a refund from the Income Tax Department.
Step 4: Track your refund
ITR refunds typically process in 30–90 days after filing. You can track the refund status on the IT portal using your PAN and assessment year.
Real TCS Examples
Example 1: Student sending ₹15 lakh for UK tuition (self-funded)
- Total remittance: ₹15,00,000
- TCS-free threshold: ₹7,00,000
- TCS applicable on: ₹8,00,000 (₹15L − ₹7L)
- TCS rate (education, self-funded): 5%
- TCS collected: ₹40,000
- Claim back in ITR: Yes, full ₹40,000 as tax credit
Example 2: Parent sending ₹20 lakh for maintenance
- Total remittance: ₹20,00,000
- TCS applicable on: ₹13,00,000 (₹20L − ₹7L)
- TCS rate (maintenance): 20%
- TCS collected: ₹2,60,000
- Claim back in ITR: Yes — but only offsets against your tax liability
Frequently Asked Questions
What is the TCS rate on remittances from India in 2026?
TCS rates depend on purpose: 0.5% for education funded by a loan, 5% for self-funded education and medical treatment, and 20% for all other purposes including travel, maintenance, and investment. TCS applies only on the amount above ₹7 lakh per financial year.
Is TCS on LRS remittances refundable?
Yes, TCS is fully refundable. It is not an additional tax — it is advance tax collected at source. When you file your Income Tax Return (ITR), you claim the TCS as a credit against your tax liability. Any excess TCS (above your tax owed) is refunded to your bank account by the Income Tax Department within 30–90 days.
Does TCS apply on every remittance from India?
No. TCS applies only on LRS remittances above ₹7 lakh per financial year per individual. If your total outward remittances in a financial year (April to March) are below ₹7 lakh, no TCS is collected at all, regardless of purpose.
How do I avoid high TCS on education remittances?
If you take an education loan from a financial institution (bank or NBFC) for your overseas tuition, TCS applies at only 0.5% above ₹7 lakh — compared to 5% for self-funded education. This can save significant amounts: on ₹20 lakh in remittances, the difference is ₹45,000 less TCS (0.5% vs 5% on ₹13 lakh above threshold).
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