LRS limit 2026 - The complete guide to sending money from India to the UK, USA and overseas property investments

You can travel visa-free; however, your money can’t. Every rupee that leaves India requires permission. This permission is known as the Liberalised Remittance Scheme (LRS). If you are sending money for tuition to London, funding living expenses in the US, buying your first apartment in Canary Wharf or diversifying into US equities like Apple or the S&P 500, the LRS limit for 2026 and revised TCS (Tax Collected at Source) on foreign remittance shape how your transfers are structured and planned efficiently.

What is the LRS limit in 2026?

The Liberalised Remittance Scheme or LRS was introduced by the Reserve Bank of India. Under this scheme, every Indian resident, including minors, can remit up to USD 250,000 per financial year, which is from April to March. At the current exchange levels, this limit equals ₹2.1–2.2 crore per person per financial year. The LRS limit is per individual, cumulative across all purposes and applicable to current and capital account transactions.

This means that if you remit ₹8 lakh for education, ₹5 lakh for travel and ₹90 lakh for property purchase, the ₹10 lakh threshold for TCS is calculated on the total amount remitted.

What is the 20% rule on TCS?

While Budget 2026 reduced TCS rates for education, medical and tour remittances, investment-related transfers will continue to attract 20% TCS once the ₹10 lakh annual threshold is crossed.

Under the Liberalised Remittance Scheme (LRS), regulated by the Reserve Bank of India

- No TCS is to be collected on the first ₹10 lakh remitted in a financial year.

- Once total outward remittances exceed ₹10 lakh, 20% TCS is applicable on the excess amount for investment-related transactions.

This includes buying overseas properties, investing in foreign stocks or ETFs, funding foreign bank deposits and purchasing cryptocurrencies via overseas exchange.

Budget 2026: What has changed in TCS on foreign remittance?

In the Union Budget presented by Nirmala Sitharaman, the Indian government has introduced genuine relief for families sending money abroad. These changes are set to take effect from April 1 2026.

New TCS rates (FY 2026-2027)

Education (Self-funded)

• Nil up to ₹10 lakh
• 2% above ₹10 lakh (previously was 5%)

Education funded by loan (u/s 80E)

• Nil TCS

Medical treatment

• Nil up to ₹10 lakh
• 2% above ₹10 lakh (previously the threshold was ₹2 lakh)

Overseas tour packages

• Flat 2%
• No minimum threshold (previously the figure was 5% / 20% slabs)

Investment / Property Purchase

• 20% above ₹10 lakh (No change under Budget 2026)

Why does this matter for Indian families?

If you are sending tuition to a UK university, transferring maintenance funds to your child in London or visiting your child studying overseas, your upfront cash blockage is reduced significantly.

For instance, earlier, for an education remittance of ₹25 lakh, the applicable TCS was 5% on ₹15 lakh, resulting in a block of ₹75,000. The figures differ now as a 2% TCS on ₹15 lakh equals ₹30,000. These changes improve liquidity and reduce working capital strain during academic cycles.

Example of buying a UK property from India

If you are remitting ₹1 crore to purchase a London apartment, on a sum of ₹10 lakh → No TCS; however, for deals touching or above ₹90 lakh → 20% TCS is applicable; this means that ₹18 lakh is collected upfront by your authorised dealer bank, making the total outflow required ₹1.18 crore.

The ₹18 lakh reflected in Form 26AS can be adjusted against your total tax liability and is refundable if in excess.

Strategic cash flow planning for investors

For first-time overseas buyers and HNI traders, the key consideration is efficient remittance structuring. Large remittances are linked to property completion schedules or exchange rate-sensitive windows.

Advanced structuring is ideal and can include splitting remittance across financial years, using family pooling, aligning transfers before 31 March and after 1 April and staggering developer stage payments.

RBI Purpose Code and Form A2

Every outward remittance requires Form A2 and an LRS Declaration. For property purchase, the correct purpose code is S0005 – Indian investment abroad in real estate. Incorrect coding can trigger reporting mismatches, lead to compliance notices and complicate repatriation. In some cases, banks can also directly report such transactions to the RBI.

Education loan for forex structuring

TCS regulations apply to education depending on how the education is funded. If a recognised financial institution backs the remittance under Section 80E of the Income Tax Act, no TCS applies, even if the amount exceeds ₹10 lakh/year.

This exemption is applicable only when the remittance is properly documented and declared as loan-funded education. Banks may need the loan sanction letter and confirmation that the funds are being remitted specifically towards education expenses.

If the education is self-funded, the criteria are different. Under the revised framework (applicable FY 2026-2027), no TCS applies on cumulative remittances up to ₹10 lakh in a financial year. However, 2% TCS applies to amounts exceeding ₹10 lakh.

The education category includes not only tuition but also hostel charges, university-managed accommodation, living expenses, insurance and study-related travel costs.

How to claim the TCS refund in the ITR

When your bank collects TCS on a foreign remittance under LRS, the amount is deposited with the Income Tax Department against your PAN. This amount is not the final tax and is treated as advance tax and adjusted when you file your Income Tax Return (ITR).

This tax is reflected in Form 26AS and in your Annual Information Statement (AIS) and Tax Information Statement (TIS). At the time of filing your ITR, the TCS amount can be set off against your total tax liability for the year. Besides, if your overall tax liability is lower than the TCS collected or if you have no taxable income, you are entitled to claim a refund of the excess amount.

You don’t need to pay any interest on the TCS amount for the period it remains with the government. This means that if ₹15–20 lakh is collected as TCS on a large overseas property remittance, the capital may remain blocked until you file your return and the refund is processed. To ensure this process is completely hassle-free and your capital is unblocked as quickly as possible, our team at Benham and Reeves offers comprehensive Tax Return Services to help you file accurately and claim your eligible refunds.

Sending money from India to the UK

International transfers from India usually take between 24 and 48 hours. Compliance checks can further extend this timeline. It is strongly suggested that you do NOT initiate any remittance on the day of property completion. This is because banks usually request a Sale & Purchase Agreement, beneficiary bank details, updated KYC and occasionally, even Form 15CA/CB.

Global diversification for HNI traders under LRS

Investing in US equities, global ETFs and foreign deposits is permitted under LRS. However, the ₹10 lakh TCS threshold is calculated cumulatively across all outward remittances in a financial year. For example, if you remit ₹8 lakh for education and invest ₹15 lakh in US equities, your total remittance becomes ₹23 lakh. TCS will apply to ₹13 lakh (₹23 lakh total minus ₹10 lakh threshold), with the applicable rate depending on the remittance's purpose.

What happens if you don’t comply?

TCS violations under FEMA can result in monetary penalties, reversal of transactions and regulatory scrutiny. Common mistakes include using the wrong purpose code, failing to add co-owners when pooling the amount, using informal transfer channels or ignoring the TCS liquidity impact. If you require assistance with LRS and buying properties in London from India smoothly, reach out to our experienced team for a one-on-one consultation.

How Benham and Reeves India can help

At Benham and Reeves India, we regularly work with global Indian families and first-time overseas investors purchasing residential property in London and other foreign markets. Our role does not involve assistance with only identifying a property. We also coordinate payment scheduling, remittance structuring, family pooling planning and alignment with overseas completion timelines.

If you are planning on remitting funds overseas for a property purchase, speak with our India office (Mumbai and Delhi) for a well-designed approach.