Amendments in TCS provisions applicable for LRS transactions – w.e.f 1^st April 2026

The Government of India vide Finance Act, 2026 read with Income Tax Act, 2025 has introduced certain amendments in Section 506 of the Income Tax Act, 2025 (corresponding to section 206C (1G) of the Income Tax Act, 1961).

Pursuant to the aforementioned amendments, effective 1^st April 2026, there are changes in the Tax Collected at Source (TCS) rates applicable for remittances, forex cards, foreign currency withdrawal or payment to a merchant establishment overseas during your visit abroad on debit cards and any other transactions made under Liberalised Remittance Scheme (LRS). The comparison between current TCS provisions and revised TCS provisions is tabulated below:

Important Information:

1. TCS will be applicable on all INR currency transfer from a Resident Account to a Non-Resident (NRO) account which qualifies as LRS.
2. As announced by the Ministry of Finance on 28 June 2023, use of International Credit Cards while overseas will not be considered as a remittance under LRS until further notice. Hence, TCS is not applicable on expenditure on International Credit Cards.
3. TCS amount will be recovered from your account.
4. TCS, once collected, cannot be refunded by the Bank in case of any return of transaction or remittances.
5. Quarterly certificates for the TCS collected will be made available for customers on their registered e-mail ID or couriered to their registered mailing address.
6. If you have already applied TDS, a declaration confirming that TDS has been paid along with the tax paid challan and form 15CA/CB will have to be furnished at the time of remittance. In such a case, TCS would not apply.
7. Credit of TCS amount can be claimed while filing the return of income.
8. Please note that a higher rate of TCS is applicable if PAN – Aadhaar is not linked (inoperative PAN)

Amendment

• Basis the Finance Act 2026, w.e.f 1^st April 2026, the remittance is intended for medical treatment, travel, or a combination of both. The rate of TCS will be 2% on amounts exceeding INR 10 lakh. For overseas tour packages, which include expenses for travel, hotel stays, boarding, lodging, or any related expenditures, the TCS rate will be 2% on each remittance with no minimum threshold.

Frequently Asked Questions:

1. What all transactions will be impacted by this TCS provision?
All remittances financial year done under the LRS will be liable for a TCS as follows:

2. Will GST be applied on the 5% Tax collected at source (TCS)?
No GST will be applicable on the tax collected TCS. However, GST will be applicable on the currency conversion & remittance service charge.

3. What are the different purposes on which the tax collection is applicable?
The tax will be applicable on all remittance(s) out of India that fall under the Liberalised Remittance Scheme (LRS) of RBI.

Important note

1. TCS amount would be recovered from the customer’s account. Please ensure the account is sufficiently funded to cover the remittance amount, TCS amount, remittance charges, correspondent bank charges and other taxes/charges as applicable. In case of insufficient balances, transactions will not be processed.
2. TCS once collected cannot be refunded by the bank in case of any return of transaction or remittances.
3. Credit of TCS amount may be available while filing the return of income.
4. Quarterly certificate for the TCS will be made available to the customers in their registered email id or the registered mailing address.