Outward Remittance from India: Rules, Limits, Documents & Process
How Much Money Can You Send Abroad from India in 2026 and What Will It Cost You?
Three questions land in every forex office in India, week after week: How much can I actually send abroad this year? What documents do I need before the bank says yes? And how much of my own money will disappear as tax before it even leaves the country?
The answers: up to USD 250,000 a year under the Reserve Bank of India's Liberalised Remittance Scheme, a handful of standard KYC documents, and a Tax Collected at Source rate that depends entirely on what you're sending the money for. People get tripped up, usually at the bank counter, usually at the worst possible moment. That's what this covers.
LuLu Forex handles outward transfers daily as an Authorised Dealer Category II entity, and most delays come down to the same handful of avoidable mistakes. Here's how to skip them.
What Is the LRS Limit and Who Does It Apply To?
The Liberalised Remittance Scheme, introduced by the RBI in 2004, lets every resident Indian, including minors, send up to USD 250,000 abroad per financial year (April to March). The scheme started at USD 25,000 and has been revised upward over two decades.
A few things people get wrong about this:
- It's a combined cap. Education fees, medical bills, gifts to relatives, overseas investments, travel spend - all of it draws from the same USD 250,000 pool per person, per year. There's nothing separate for each purpose.
- It resets on April 1, not on your remittance anniversary.
- Minors can remit under LRS too, but a parent or legal guardian has to complete the paperwork on their behalf.
- Overseas credit card spending currently sits outside the LRS count, though that's the kind of detail RBI has adjusted before, so don't treat it as permanent.
If your transfer purpose isn't covered under LRS (certain business remittances, for instance), separate FEMA provisions apply and the limit structure changes.
What Will TCS Actually Cost You?
This is the part that catches people off guard, because the rate depends on why you're sending the money, not just how much.
The Union Budget 2026 cut the education and medical TCS rate from 5% to 2%, so for FY 2026-27:
- Absolutely no TCS on the first ₹10 lakh remitted per financial year, irrespective of the purpose (except in the case of overseas tour packages, where there is no threshold).
- Self-funded education or medical remittances above ₹10 lakh are subject to 2% TCS.
- No TCS applies to education remittances above ₹10 lakh if the amount is funded through an eligible education loan.
- A 20% TCS applies to remittances exceeding ₹10 lakh for all other purposes: investments, gifting, overseas property purchase, and maintenance of relatives abroad.
- Overseas tour packages attract a flat 2% TCS, with no ₹10 lakh exemption.
TCS is not a penalty, but a tax credit that is paid in advance. It appears in your Form 26AS and AIS, and you claim it as a credit against your total tax liability while filing your tax returns. If the TCS collected exceeds your tax liability, you get the excess refunded. This refund can take months, so the delay creates a real cash flow hit even though the money eventually comes back.
If the timing is flexible, splitting the remittance across the March-April financial year boundary lets you use two ₹10 lakh exemptions instead of one.
What Documents Does the Bank Actually Need?
Every Authorised Dealer bank or forex company will ask for broadly the same set:
- PAN card (mandatory, no exceptions)
- Valid passport
- A2 form, the standard application-cum-declaration for foreign exchange remittance
- Purpose-specific documents like an admission letter and fee invoice for education, a hospital estimate or treatment letter for medical, a sale agreement for property, or a gift deed for gifting
- Bank statement showing the source of funds
The payment has to come from your Indian savings account. Current account, NRO account, and NRE account payments aren't accepted for standard forex transactions. If your money is sitting in the wrong account type, that's a delay you're creating for yourself before you've even walked in.
Payment can also come from close relatives as defined under Section 2(77) of the Companies Act, 2013, which is useful if a parent is funding a child's education remittance and doesn't want to route it through the student's own account.
How Does the Remittance Process Actually Work?
Step 1: Confirm the purpose code
Every remittance is tagged with an RBI purpose code (education, medical, gift, investment, and so on). This determines your documentation and your TCS treatment, so get it right at the start.
Step 2: Submit the A2 form and KYC documents
This is where PAN, passport, and purpose-specific paperwork come in. Incomplete documentation is the single biggest cause of delayed transfers.
Step 3: Fund the transfer from an eligible account
Indian savings account only. Route it correctly the first time.
Step 4: Bank processes and remits
Processing time varies by destination country and banking corridor, but a properly documented transfer with no compliance flags typically moves faster than people expect.
Step 5: Track and reconcile
Keep your remittance receipt and TCS certificate. You'll need them at tax filing time to claim your TCS credit.
So Who's Actually Sending Money Abroad and Why?
Education funding, medical treatment, family maintenance, and outward investment make up the bulk of LRS remittances from India, and each carries its own compliance quirks: education loans change your TCS rate entirely, medical remittances often need updated cost estimates from the treating hospital, and investment remittances get zero TCS relief above the threshold. Treating "outward remittance" as one uniform process is where most of the confusion in this space comes from.
The Bottom Line
The LRS cap is USD 250,000 a year, combined across all purposes. TCS is nil up to ₹10 lakh, then anywhere from 2% to 20% depending on what the money's for. Documentation is standard but unforgiving if you get the source account wrong.
None of this is complicated once someone walks you through it correctly the first time, which is the actual value a forex provider brings, not just executing the transfer but keeping you out of the delays and tax surprises that come from doing it wrong.
LuLu Forex processes outward remittances daily as a licensed Authorised Dealer Category II entity, with branches across India for anyone who'd rather sit across a desk than fill out forms alone. Whether you're funding a semester abroad, a medical procedure, or an overseas investment, get your purpose code and documents right from the start and the rest moves fast.
CONTACT LULU FOREX FOR A CALLBACK
FAQs
1. Can I send more than USD 250,000 abroad in a year?
Not under LRS. Amounts beyond the USD 250,000 annual cap need specific RBI approval, which isn't a standard retail process.
2. Is TCS a separate tax or does it count toward what I already owe?
It's a prepaid credit, not an extra tax. It's adjusted against your total income tax liability when you file your return, and any excess is refunded.
3. Does an education loan actually reduce my TCS?
Yes. Education remittances above ₹10 lakh funded by an eligible loan attract nil TCS, versus 2% if you're self-funding.
4. Can I pay for a remittance from my NRE or current account?
No. Standard forex remittances need to be funded from an Indian savings account. NRO, NRE, and current account payments aren't accepted.
5. Do minors need a separate process to remit under LRS?
No separate scheme, but a parent or legal guardian has to handle the documentation and application on the minor's behalf.
6. Does spending on my credit card abroad count toward my USD 250,000 limit?
As of current rules, overseas credit card spend sits outside the LRS count. This has shifted before, so don't assume it's fixed permanently.
7. What happens if my remittance purpose doesn't fall under LRS?
Certain transactions, mainly specific business remittances, are governed by separate FEMA provisions with different limits and documentation. Check with your provider before assuming the standard LRS rules apply.
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