Foreign Remittance Tax in India 2026, TCS Rules, Rates and Exemptions

India has updated its tax collection at source (TCS) rules for foreign remittances effective 2026, impacting non-resident Indians (NRIs) and others sending money abroad. The tax applies to remittances under the Liberalised Remittance Scheme (LRS) of the Reserve Bank of India.

As per the revised rules, a TCS of 5% is levied on remittances exceeding Rs. 7 lakh in a financial year for purposes such as education, medical treatment, and travel. For other purposes, the rate is 20% on amounts above the threshold.

Exemptions are available for remittances made for education or medical treatment, where the TCS rate is 0.5% if the amount is funded by a loan from a specified financial institution. No TCS is applicable on remittances up to Rs. 7 lakh in a year for any purpose.

NRIs sending money from their NRE or FCNR accounts are not subject to TCS, as these accounts are exempt from LRS. However, funds transferred from resident accounts or for non-exempt purposes fall under the tax net.

The government introduced these measures to track high-value outflows and ensure tax compliance. Taxpayers can claim credit for TCS deducted when filing their income tax returns, subject to applicable rules.