From April 1, 2025, TCS at 20% applies to LRS remittances for investment purposes above ₹10 lakh per financial year.

Here is how it works at the time of transfer.

Say you want to remit ₹15 lakh. The first ₹10 lakh is exempt. TCS at 20% applies to the remaining ₹5 lakh, which is ₹1 lakh. 

Your bank collects this ₹1 lakh from your account on top of the ₹15 lakh you are remitting. You need ₹16 lakh available in your account before you initiate the transfer.

The ₹1 lakh is not a final tax. It appears as a credit in your Form 26AS and Annual Information Statement. 

When you file your ITR, it is adjusted against your total income tax liability. If your tax payable is lower than your TCS credits, you receive the balance as a refund.

The refund typically comes 6 to 9 months after filing. This creates a temporary cash flow requirement worth planning for on larger transfers.

The TCS threshold is cumulative across all banks in a financial year, tracked by PAN. If you remit ₹8 lakh through HDFC in May and ₹5 lakh through ICICI in September, your total remittance is ₹13 lakh. TCS applies to ₹3 lakh, which is ₹60,000, and your bank collects it at the time of the second transfer.

Two things worth noting.

First, TCS does not apply to the ESOP/RSU direct transfer route covered in Chapter 3. When USD moves from your employer’s broker to Vested entirely within the US banking system, it is not an outward LRS remittance from India. TCS has no basis to apply.

Second, the LRS limit of $250,000 per financial year is separate from the TCS threshold. You can remit up to $250,000 per year. TCS simply applies to the portion of that above ₹10 lakh.