A recurring question among taxpayers is: How much Tax Collected at Source (TCS) applies when money is repatriated from India to an overseas country? The answer depends primarily on the residential status of the individual under Indian tax and FEMA regulations.
There is no provision for TCS collection when a Non-Resident Indian (NRI) remits money from India abroad. TCS on foreign remittance is governed by Section 206C(1G) of the Income-tax Act, which applies only to remittances made under the Liberalized Remittance Scheme (LRS). As per RBI Master Directions, LRS is applicable only to Resident Individuals, not NRIs. Hence, TCS applies only when a resident individual remits funds outside India.
Applicable TCS Rates under LRS
- 20% TCS: Where total foreign remittances exceed ₹10 lakh in a financial year (general purposes).
- 5% TCS: Where remittance is for education or medical purposes (exceeding ₹10 lakh).
- The Union Budget 2026 has proposed reducing the 5% rate to 2% (subject to enactment).
Any TCS collected is not an additional tax burden. It is adjustable against the taxpayer’s final income-tax liability and refundable at the time of filing the Income Tax Return (ITR), where excess tax has been collected.
The permissible remittance limits differ for Residents and Non-Residents as prescribed under RBI regulations and notifications. These limits must be reviewed before initiating any cross border transfer.
For foreign remittances (by Resident or Non-Resident):
- Form 15CA and 15CB is required to be furnished online.
- Form 15CB (CA Certificate) is required only when the remittance exceeds ₹5 lakh in a financial year.
Confused about TCS, LRS & money repatriation from India?
