RBI Liberalised Remittance Scheme: What Indian Travellers Must Know
✅ Last verified on-the-ground: 2026-07-17
If you’re an Indian heading to Southeast Asia and remitting money under the Liberalised Remittance Scheme (LRS), the most important number to know in 2026 is this: every dollar above ₹7 lakh per financial year that you send abroad attracts 20% Tax Collected at Source (TCS), paid upfront at the time of remittance, refunded only when you file your return. Crossed this carefully and LRS is a non-issue. Walk in blind and a ₹2 lakh trip can quietly become ₹2.4 lakh. This guide covers the LRS limits, the 20% TCS thresholds, which transactions trigger the charge, and how to keep your Thailand or Vietnam trip fully LRS-compliant without paying a rupee more than you owe.
I’ve verified the figures in this article against the RBI’s current FEMA regulations and traveller reports from the first half of 2026, cross-checked with HDFC Bank’s remittance disclosures as of June 2026.
Quick Answers
Bottom line up front. Skim this table before anything else.
| What | Answer | Price (INR) |
|---|---|---|
| LRS annual cap | USD 250,000 per financial year (Apr. Mar) | ₹24,082,350 (~$250,000) at ₹96.33/USD |
| TCS rate (above ₹7L threshold) | 20% on overseas tour packages and most remittances | ~₹28,000 on a ₹1.4L spend |
| TCS rate (education/medical, financed by loan) | Nil up to ₹10L, then 0.5% above ₹10L | ₹500 (~$5.19) on a ₹1L education remit |
| Tour package definition under LRS | Any bundled “travel + stay + transport” paid via an OTA/operator | Catches MakeMyTrip, Yatra, Thomas Cook bookings |
| What you must NOT do | Remit via hawala or unofficial channels | ₹5L fine + 3x amount penalty under FEMA |
The LRS limit isn’t a “spending limit.” It’s a remittance cap: how much you can legally send abroad through banking channels per year.
How LRS Works
The Liberalised Remittance Scheme, introduced by the RBI in February 2004 under FEMA 1999, lets any Indian resident (resident individual, not NRI) send up to ₹24,082,350 (~250,000 USD) per financial year outside India for any permitted current or capital account transaction. You’re allowed to pool this across purposes: travel, education, medical, gifts, maintenance, investments, even buying property abroad. The USD 250,000 ceiling is a combined family cap if both you and your spouse remit, but it’s each individual’s ceiling in their own PAN.
LRS applies the moment money crosses the Indian border through a bank or authorised dealer. Withdrawing THB from a Bangkok ATM on your HDFC debit card doesn’t count as “LRS remittance.” It’s a debit card swipe abroad, settled under your existing card’s foreign currency limit (typically ₹288,988-₹481,647 (~3,000-5,000 USD) per quarter depending on the bank). What counts is the moment you walk into your bank, fill out Form A2, and ask them to wire USD to a foreign account, or pay an OTA in INR for a tour package, or buy forex in cash above the threshold.
Two things matter: how much you remit, and under what “purpose code.” TCS rates differ by purpose. Tour packages and most leisure travel now attract 20% TCS above ₹7 lakh per financial year. Education loans have separate, much lower rates. Medical treatment has its own carve-out.
The 20% TCS Rule Explained
Before April 2023, TCS on most overseas remittances was 5%. The Finance Act 2023 hiked the leisure/remittance rate (purpose code S0001–S0021, broadly) to 20%, with an ₹7 lakh annual exemption per individual under Section 206C(1G) of the Income Tax Act. The intent was to push outbound travel into the tax net. The effect on a Southeast Asia backpacker has been real: a ₹2 lakh group trip booking paid via an Indian OTA now costs ₹2.4 lakh at the counter, and the OTA collects the ₹40,000 (~$415.24) TCS on top.
Here’s the structure for the 2026 financial year:
| Purpose | Aggregate below ₹7L/year | Aggregate above ₹7L/year |
|---|---|---|
| Tour package / leisure (LRS S-codes) | Nil TCS | 20% TCS |
| Education financed by loan | Nil up to ₹10L | 0.5% above ₹10L |
| Education (no loan) | Nil up to ₹7L | 5% above ₹7L (Section 206CCA) |
| Medical treatment | Nil up to ₹7L | 5% above ₹7L |
| Other LRS remittances (gift, maintenance) | Nil up to ₹7L | 20% above ₹7L |
That “aggregate” is per PAN, per financial year (April to March), across all banks that report Form 15CC. Reusing the ₹7L exemption across multiple banks doesn’t double it. Banks share the data through the Income Tax portal.
The 20% is collected but it’s not a tax. It’s an advance tax credit against your income tax. If your total income (including salary, business, capital gains) puts you in the 30% bracket, and you’ve already paid TDS on that income, you can claim the TCS as a refund when you file your ITR. Travellers with no other income and a small tour package often don’t end up with a refund because total tax liability is below what was collected. This is the part nobody tells you at the forex counter.
Comparison of Options for Paying Abroad
Whether LRS or TCS triggers for your trip depends on how you pay. Different channels attract different TCS treatment.
| Payment Method | TCS Triggered? | Rate | Notes |
|---|---|---|---|
| Indian OTA booking (MMT, Yatra, Thomas Cook) | Yes, full package amount | 20% above ₹7L/year | OTA collects and deposits with IT dept |
| Direct bank wire to foreign tour operator | Yes | 20% above ₹7L/year | Use Form A2, purpose code S0001 |
| Forex card loaded in India (above ₹50K threshold per load is reported) | Reported but TCS applies only when total crosses ₹7L | 20% above ₹7L/year | Most banks issue Form 15CA/CB |
| Cash forex purchase from bank/FFMC (₹50K+ per transaction) | Reported; TCS above ₹7L | 20% above ₹7L/year | New ₹50K rule effective 2026 |
| International debit/credit card spend abroad | No LRS/TCS at point of spend | Nil | Counts as card settlement, separate from LRS |
| UPI abroad (where accepted) | No LRS/TCS at point of spend | Nil | Treated like card settlement |
| Hawala / unofficial channels | Illegal under FEMA | ₹5L–₹50L fine + imprisonment | DO NOT |
The most useful framing: card swipes and UPI abroad don’t touch LRS. Only remittances from your Indian bank to a foreign entity (or to an Indian OTA paying a foreign supplier on your behalf) trigger TCS. Spend on the road with a debit card and you avoid the form-filling entirely. Spend through MMT on a Bangkok tour package and 20% TCS is collected at the checkout.
India-Specific Gotchas (RBI, TCS, PAN)
A handful of practical points that trip Indian travellers up, verified against current RBI and Income Tax Department practice as of mid-2026.
Form A2 and purpose codes. Every bank remittance under LRS requires you to fill Form A2 and declare the purpose code. The most-used codes for travel are S0001 (travel for business), S0002 (travel for leisure), S0301 (gift), and S0305 (maintenance of close relatives). Pick the wrong code and you may be denied the remittance or, worse, attract a different TCS treatment. For a backpacking trip, S0002 is correct.
PAN is mandatory. LRS remittances above ₹50,000 require PAN. Without PAN, the bank will refuse the wire. The PAN is also how the IT department tracks your aggregate remittances across banks.
₹50,000 cash rule (2026 update). Effective from mid-2025, any forex cash purchase above ₹50,000 (~$519.05) per transaction from a bank or Full-Fledged Money Changer (FFMC) triggers TCS in the same way a wire does. Below ₹50,000 (~$519.05) in cash, no TCS is collected at source. Above it, the bank files Form 15CC and TCS becomes payable at year-end aggregation. Many travellers missed this in 2025, so the IT department now matches Form 15CC filings.
Buying from a friend who already converted. Buying “extra” forex from another traveller isn’t illegal per se, but selling it is. If you sell more than ₹288,988 (~3,000 USD) equivalent of forex to another person, you’re acting as an unauthorised dealer. The penalty is up to twice the amount involved under FEMA. Buy from your own bank/FFMC.
Children and HUF. Minor children can remit under their own PAN, getting their own ₹7L threshold and USD 250,000 ceiling. HUF (Hindu Undivided Family) accounts can also remit, with their own PAN-based ceiling. Two PANs in one family effectively double the exemption; this is legal and widely used by families booking separate tour packages.
Carry cash out of India. You can carry up to ₹288,988 (~3,000 USD) in foreign exchange cash out of India without customs declaration, and up to USD 250,000 with a customs declaration form at the airport. Travellers report that customs at Bangkok/Vietnam landings rarely question amounts under USD 5,000 in cash, but declaring in India is the cleaner route for any amount near the cap.
Refund claim. If your TCS is higher than your total tax liability, file your ITR (Form ITR-1 if salary only, ITR-2 if business/capital gains) and claim the excess as refund. The refund typically arrives in 3–6 months. Keep your Form 26AS reflecting the TCS credit, which most banks now auto-populate.
More on TCS layers and how it stacks with other charges →
What Bananarchy Travellers Use
Most travellers I’ve sent to Thailand, Vietnam, Laos, and Cambodia on Bananarchy’s fixed-cost trip pay through the umbrella tour package, which we book as a single LRS transaction. Because the package cost is well above ₹7 lakh threshold when scaled across multiple travellers over a financial year, the 20% TCS rule kicks in. We build that into the trip cost upfront so it isn’t a surprise at the wire. Travellers paying on their own have options: those who carry a debit card loaded via Indian bank and spend locally keep their transactions off the LRS radar entirely, and that remains the cheapest route for backpackers staying under ₹96,329-₹144,494 (~1,000-1,500 USD) per trip.
The pattern that consistently works: send nothing via LRS for trips under ₹7 lakh per year. Use a forex card or international debit card for ground spending. Apply for a multi-trip package booking only once you’ve aggregated to a point where the tour-operator overhead saves money, and only then accept the 20% TCS as a recoverable advance tax.
Getting Connected
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FAQ
Does UPI work in Southeast Asia and count under LRS?
UPI works in Singapore, Bhutan, Nepal, UAE, and select merchants in Thailand and Vietnam via QR partnerships. Where accepted, it’s treated as a card settlement by your Indian bank. It does not trigger LRS or TCS at the point of spend.
What happens if I lose my forex card abroad?
Call your bank’s 24/7 international hotline within 24 hours. They block the card, courier a replacement to your hotel or the next city on your itinerary, and the balance is preserved on the central server. Most Indian banks have ₹5,000 (~$51.91) emergency cash assistance through partner networks.
How much cash can I take out of India at the airport?
Up to USD 3,000 (or equivalent in foreign currency notes) without a customs declaration form, and up to USD 250,000 with a declaration. Anything above the undeclared limit crossing customs without paperwork is seized.
Is LRS only for travel?
No. LRS covers travel, education, medical, gifts to NRIs, maintenance of relatives, investments (including equity in foreign listed companies under ₹50 lakh ISTT route), buying property abroad, and emigration. The USD 250,000/year is a combined cap across all these purposes per individual.
Can I claim back 20% TCS if I file ITR?
Yes, as a refund. If your total tax liability after deductions is below the TCS you’ve paid, the excess is refunded. Most salaried employees with home loan deductions end up with a refund. Filing ITR-1 or ITR-2 with Form 26AS reflecting TCS is required.
Will the 20% TCS change in Budget 2026?
The 20% leisure TCS rate has stayed in force since April 2023. There’s been no public notification of change as of mid-2026. Always check the Income Tax Department’s e-filing portal before your financial year-end if you’re approaching the ₹7L threshold.
Subodh’s Take
The 20% TCS has cooled the loud-end of the overseas tour market, but for backpackers doing a 10–14 day Southeast Asia trip on a budget under ₹1.5 lakh, you’ll never hit ₹7 lakh aggregate remittance through any one channel, and you won’t pay a rupee of TCS. Just don’t book your entire trip as a “package” through an Indian OTA for the convenience of a single receipt. Split it: pay the international legs on a debit card, pay local hostels in country on arrival or via Booking.com, and your LRS exposure stays at zero.
