Do you frequently send money abroad? If so, you should familiarize yourself with the regulations first to avoid potential trouble. The government has set specific limits, and there are distinct rules regarding taxation.
Many Indians have settled abroad, while others go there for education or medical treatment; consequently, their family members in India often send them money. This has become a common practice. People also transfer funds overseas for purposes such as investments or purchasing property. However, there are specific rules governing these transactions that must be strictly followed.
What is the limit for sending money?
A resident of India can remit a maximum of $250,000 abroad in a financial year (April to March) under the Liberalized Remittance Scheme (LRS). This limit applies to transfers made through any bank and in various foreign currencies. The funds can be used for education, medical treatment, travel, business, supporting relatives, gifting, or donations. Money can also be sent for overseas investments, opening bank accounts, or purchasing property, subject to certain conditions.
What documents are required?
When sending money abroad, one must provide the bank with details such as the PAN card, the purpose of the remittance, the amount, the source of funds, and information about the recipient. The bank also verifies KYC details and ensures compliance with other mandatory regulations. If necessary, the bank may request documents related to income, bank statements, or investments.
TCS on remittances exceeding ₹10 lakh
If the amount remitted abroad under LRS in a financial year exceeds ₹10 lakh, TCS (Tax Collected at Source) may apply. As of April 1, 2026, a 2% TCS applies to amounts exceeding ₹10 lakh for education and medical treatment, whereas the rate is 20% for other purposes. However, different rules apply to overseas tour packages.
Disclosure Required for Overseas Assets
If you hold assets or have made investments abroad, you are required to disclose this information in your income tax return in certain cases. Taxpayers who are ordinarily resident in India must report details of foreign assets and income earned abroad in the relevant tax forms.
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