Foreign Remittance Tax in India 2025 – TCS Rules, Rates & Exemptions

If you are sending money abroad, you may have to pay foreign remittance tax in India, also known as TCS on foreign remittance. Under Section 206C(1G) of the Income Tax Act, banks and authorised dealers collect Tax Collected at Source (TCS) when you transfer funds overseas.

Key Takeaways

• Rates (Apr 2025): Nil–5% for education/medical, 5–20% for tours, 20% for other remittances above ₹10L.
• Exemptions: Education loans (u/s 80E), education/medical up to Rs.10 Lakhs, and overseas credit card spends (till further notice).
• TCS can be checked in Form 26AS or Form 27D and can be adjusted against tax liability, or claimed as a refund if there is no liability.
   

What is TCS on Foreign Remittance?

Tax on foreign remittance applies when an Indian resident transfers money abroad under the RBI’s Liberalised Remittance Scheme (LRS). The remitter pays a percentage of the amount as TCS, which is deposited with the government.

• The deducted TCS reflects in your Form 26AS.
• You can adjust it against your final tax liability while filing ITR.
• If you have no tax liability, you can claim a refund of the deducted TCS.

Latest TCS Rates on Foreign Remittance (Effective April 2025)

Exemptions from Foreign Remittance Tax

The following types of remittances are exempt from TCS applicability:

• Education Loans: financed by banks/financial institutions (u/s 80E).
• Remittances Under Rs.10 lakh: for education and medical purposes.
• International Credit Card Payments: while overseas (TCS deferred until further notice).

Illustration

Let us understand the calculation of the foreign remittance TCS with the help of an example. Suppose you wish to invest Rs. 13 lakhs in a foreign asset and approach a money transfer agency for the same.

In this case, a 20% TCS on foreign remittance will be applicable on the amount exceeding Rs. 10 lakhs, i.e., Rs. 3 lakhs. So, the money transfer agency will collect Rs. 60,000 (20% of Rs. 3 lakhs) from you as TCS and you will have to make a total payment of Rs. 13,60,000 to complete your investment.

How to Check and Claim TCS on Foreign Remittance

TCS deducted during the financial year on your overseas transfer, you can check and verify  through the following documents:

1. Form 27D -  This document was issued by an authorised dealer or person who deducted TCS. This TCS certificate proves that TCS has been collected and deposited with the tax authority.
2. Form 26AS -This tax credit statement is available on your Income Tax e-filing portal; it contains details of all TDS and TCS amounts deducted against your PAN.
3. Other Statements -The Annual Information Statement (AIS) and Tax Information Statement (TIS) available on your Income Tax e-filing portal also help confirm the TCS deducted from your transfers.

Note: While filing your ITR, you can adjust TCS against your tax liability or claim a refund if you have no liability.

How to Save on Foreign Remittance Taxes? 

The increased rate for foreign remittance tax in India can make overseas money transfers more expensive. However, there are a few methods by which you can reduce your overall taxable income. When TCS is applicable for any type of transaction, the money is collected by banks. So, you can adjust your total TCS amount depending on your tax liability. 

For instance, let’s say you remit Rs. 15 lakh to a relative living in a foreign country. Under such circumstances, there will be a TCS of Rs. 1 lakh i.e., 20% on the excess 5 lakhs as there is no TCS up to Rs. 10 lakhs. Now, while filing your tax returns, if you have a tax liability of Rs. 2.5 lakh, you can reduce your tax amount by adjusting the TCS with the tax payable. 

Thus, your net tax liability will be reduced to Rs. 1.5 lakh. Banks generally provide a TCS certificate at the time of deduction. You can use it to claim TCS refunds when filing your Income Tax Returns.

Now, if you do not have taxable income, you can claim the TCS amount deducted as a refund. Moreover, you are also liable for the same if your total tax liability is lesser than the TCS amount. 

Note – There is no interest applicable on the blocked TCS amount.

How to Transfer Money from India to the USA without Paying Taxes?

Non-resident Indians (NRIs) can repatriate a maximum of $1 million without paying any tax on money transfers from India to the USA. As per Section 206C(1G) of the Income Tax Act, there is no applicable TCS when NRIs transfer money from their NRO to their NRE account.

This benefit allows NRIs to remit their income in India, like salary, dividends, business profits, rent, etc., via their NRO accounts. However, transactions of these types will need special approval from the RBI. 

It is to be noted that TCS applies to foreign payments made for expenditures through a debit card or forex card while overseas. However, foreign expenditures made through international credit cards while being overseas would not count as LRS and hence would not be subject to TCS under Section 206C(1G) of the Income Tax Act.

The finance ministry has postponed the application of TCS on foreign expenditures made through international credit cards until further guidelines from the ministry, so there may be TCS applicability on international credit cards soon. 

Final Word

Foreign remittance tax (TCS) ensures compliance and transparency in overseas transfers. Whether you’re sending money abroad for studies, medical expenses, travel, or investments, knowing the latest TCS rates and exemptions can help you save money, avoid penalties, and claim refunds easily.
Always disclose foreign remittances correctly in your Income Tax Return to stay compliant.