If you're sending money abroad, for your own overseas trip, a child's education, medical treatment, or an international investment, you're operating under the Liberalised Remittance Scheme (LRS), which allows resident individuals to remit up to $250,000 (or its equivalent) abroad per financial year for permitted purposes. Alongside this limit, Tax Collected at Source (TCS) applies to remittances above a certain threshold, and the applicable rate depends heavily on the purpose of your remittance.
The Threshold That Applies Across All Remittance Types
The TCS threshold is ₹10 lakh per financial year (raised from ₹7 lakh following Budget 2025 amendments), calculated cumulatively across all your remittances during the year, not per individual transaction or per purpose. If you send ₹4 lakh for a family trip, ₹3 lakh for your child's tuition, and ₹5 lakh toward an overseas investment within the same financial year, your combined remittances (₹12 lakh) exceed the ₹10 lakh threshold, and TCS applies to the amount above it.
Current TCS Rates by Purpose (Effective April 1, 2026)
| Purpose | TCS Rate |
|---|---|
| Education, self-funded, above ₹10 lakh | 2% |
| Education, funded through an approved education loan | 0% |
| Medical treatment, above ₹10 lakh | 2% |
| Overseas tour packages | 2% (no minimum threshold) |
| Other purposes (investment, gifts, maintenance of relatives abroad) | 20% above ₹10 lakh |
The rates for education, medical treatment, and tour packages were reduced from their earlier, higher levels as part of recent budget changes, a meaningful relief for families sending children abroad for education or planning international travel.
Why Overseas Tour Packages Have No Minimum Threshold
Unlike education and medical remittances, which only attract TCS above ₹10 lakh, overseas tour package payments attract 2% TCS from the very first rupee, with no exemption threshold. This means even a modest international holiday package booked through a tour operator triggers TCS, while the equivalent amount spent independently (booking flights and hotels separately yourself rather than through a package) may be treated differently depending on how the payment is structured and classified.
Is TCS an Extra Cost, or Just Upfront Tax Collection?
This is the most common point of confusion. TCS isn't an additional cost on top of your tax liability, it's tax collected in advance, adjustable against your final tax liability when you file your income tax return. If your actual total tax liability for the year is lower than the TCS collected, you get the excess back as a refund. If it's higher, the TCS reduces what you still owe. Either way, it's a cash flow timing issue (you pay upfront rather than at year-end), not a permanent additional cost, provided you file your ITR and claim credit for it correctly.
Why the Education Loan Route Matters So Much
The 0% TCS rate for education funded through an approved loan, compared to 2% for self-funded education above ₹10 lakh, is a genuine reason some families choose to finance at least a portion of overseas education through a loan rather than remitting entirely from personal savings, beyond the separate Section 80E interest deduction benefit discussed in our education loan interest deduction guide. Combined, these two benefits make loan-financed overseas education meaningfully more tax-efficient than an equivalent self-funded remittance.
How TCS Is Actually Collected
The bank or authorised dealer processing your foreign remittance collects the TCS at the time of the transaction, adding it to the amount you need to pay them (so if you're remitting ₹15 lakh for a self-funded course, with ₹5 lakh above the ₹10 lakh threshold attracting 2% TCS, you'd pay ₹15 lakh plus ₹10,000 TCS to the bank, which then deposits this with the government against your PAN).
Frequently Asked Questions
Does TCS apply to money sent abroad for a family member's living expenses?
Remittances for maintenance of relatives abroad generally fall under the "other purposes" category, attracting 20% TCS above the ₹10 lakh threshold, a meaningfully higher rate than education or medical remittances, worth planning for if you're supporting family living overseas.
Can I claim the TCS collected on my remittances as a credit when filing my ITR?
Yes, TCS is reflected in your Form 26AS and Annual Information Statement, and you claim credit for it against your total tax liability when filing your return, exactly like TDS credit.
Does TCS apply if I'm sending money for an international investment, like buying US stocks?
Yes, remittances for overseas investment purposes fall under the "other purposes" category, attracting 20% TCS above the ₹10 lakh cumulative threshold for the year, a significant upfront cash flow consideration if you're planning meaningful international investment remittances.
Is the ₹10 lakh threshold per person, or per family?
It's calculated per individual remitter (based on PAN), cumulatively across all their remittances in the financial year, not pooled across a family. If multiple family members each remit under their own name and PAN, each individual's threshold is assessed separately.
