LRS Limits and 20% TCS: What It Actually Costs to Send Money from India to Australia (2026)

Two separate rules govern one transfer

When you send money from India to Australia — your own savings, a gift to a child studying here, proceeds from selling a flat, or support for a parent who's just landed — two entirely separate government rules apply to the same transaction, and guides that blur them together are where most of the confusion starts.

The first is the Reserve Bank of India's Liberalised Remittance Scheme (LRS), which caps how much a resident individual can send abroad in a financial year. The second is Tax Collected at Source (TCS), an Income Tax Department rule that makes your bank collect an upfront amount on larger remittances — not a fee the bank keeps, but an advance against tax you may or may not actually owe. Both are set independently, both get revised at India's Union Budget, and both matter for anyone moving money between the two countries.

How much you're allowed to send: the USD 250,000 ceiling

Under the LRS, every resident individual — including minors, through a guardian — can remit up to USD 250,000 per financial year (1 April–31 March) without needing RBI's prior approval. This limit has held since it was last set and remains unchanged for FY2026-27 (Reserve Bank of India, Liberalised Remittance Scheme FAQs, accessed 25 Jul 2026).

It's a single combined ceiling, not USD 250,000 per purpose or per bank — if you use an authorised dealer bank for a gift to your sister in Melbourne and another bank for tuition fees for your son in Sydney, both draw down the same annual limit. Permitted purposes include private travel, gifts and donations, maintenance of close relatives abroad, education, medical treatment, employment or emigration-related costs, and capital transactions like buying property or investing abroad. It cannot be used for a small list of prohibited purposes — lottery tickets, margin trading on overseas exchanges, or remittances to countries or entities flagged by the Financial Action Task Force. Corporates, partnerships, LLPs and HUFs aren't eligible; it's for resident individuals only, and NRIs remitting from their own NRE/NRO accounts sit outside the scheme entirely.

Anything beyond USD 250,000 in a financial year needs specific RBI approval — a rare, case-by-case process, not a routine banking transaction.

What triggers TCS, and how much it costs

TCS under section 206C(1G) of the Income-tax Act 1961 (recodified as section 394(1) of the Income-tax Act 2025 from 1 April 2026, when the new Act replaced the 1961 one) kicks in once your cumulative LRS remittances in a financial year cross ₹10 lakh — all purposes, all banks, added together against your PAN. Below that, nothing is collected. The threshold was raised from ₹7 lakh to ₹10 lakh from 1 April 2025, one of the direct tax changes announced in Union Budget 2025-26 (Press Information Bureau, "Slew of Direct Tax Reforms Proposed in Union Budget 2025-26," accessed 15 Jul 2026).

The rate above that threshold depends on why you're sending the money, and it changed again at Budget 2026. As at 25 July 2026 — inside FY2026-27, which runs from 1 April 2026 — the rates in force are:

(Sources: Union Budget 2026-27 speech, paragraphs 103–104, Press Information Bureau; Income Tax Department, Tax Collection at Source overview; accessed 25 Jul 2026.)

The practical read: education paid for with a bank loan attracts no TCS at all, and self-funded education and medical costs now attract a comparatively light 2% above the threshold, down from 5% a year earlier. Everything else — including the family-maintenance and gift transfers that are probably the most common reason someone reading this is sending money to Australia — still sits at 20% above ₹10 lakh. That 20% figure is the one that catches people out, because it's easy to assume "sending money to my own family" is treated gently. It isn't — it falls in the same bucket as an unrelated investment remittance.

Two more mechanics worth knowing. First, TCS is collected in addition to the amount you're remitting, not deducted from it — your bank debits your India account for the remittance plus the TCS, and the full amount you intended still reaches Australia. Second, a valid PAN is mandatory to use LRS at all; if your PAN isn't linked to Aadhaar and has gone "inoperative," banks are required to apply a higher TCS rate under section 206CC of the 1961 Act (merged into section 397(2) of the Income-tax Act 2025 from 1 April 2026) rather than the standard rate shown above — one more reason to check your PAN-Aadhaar link status before a large transfer, separate from the remittance itself.

TCS is not money you lose — it's a credit, not a cost

This is the part most explainers bury in a footnote: TCS is not a tax. It's an advance collection against tax you may already owe, or may owe nothing at all.

Every rupee of TCS collected on your remittance is deposited against your PAN and shows up in your Form 26AS and Annual Information Statement on the income tax e-filing portal. From there, it works exactly like TDS deducted from your salary:

• You can adjust it against your advance tax liability during the financial year, rather than letting it sit idle until you file your return — reducing what you need to pay in advance-tax instalments.
• When you file your Income Tax Return, the TCS collected is credited against your total tax liability for the year.
• If the TCS collected is more than you actually owe — common for people whose remittance is a gift or a transfer of already-taxed savings rather than fresh income — the excess is refunded to you, the same way any excess TDS is refunded.

None of this requires special pleading or a tax-planning strategy — it's simply how the mechanism is designed to work, and it applies whether the money you're sending is fresh income, savings you've already paid tax on, or a gift. The only genuine cost is a temporary one: the TCS amount is tied up between the date of remittance and the date you either adjust it against advance tax or receive your refund, so it's a cash-flow consideration for a large transfer, not a permanent loss.

Worked example: sending ₹30 lakh for family maintenance

Say you're an Indian resident sending ₹30 lakh in one financial year to support a parent or sibling who has recently moved to Australia — declared to your bank as "maintenance of close relatives," which falls in the "any other purpose" bucket at the current 20% rate.

As a rough illustration at mid-2026 exchange rates — around ₹67 to the Australian dollar, though the exact rate moves daily and varies by bank — the ₹34 lakh debited from your account is roughly A$50,700 in outflow, of which about A$44,800 lands in Australia and the remaining ~A$6,000 equivalent sits with the Indian tax department as a recoverable credit rather than a cost.

For comparison, if the same ₹30 lakh were instead for a family member's self-funded medical treatment abroad, the rate would be 2% rather than 20%: TCS of ₹40,000 on the ₹20 lakh above threshold, a very different outcome for what is, on paper, an identical remittance amount — which is why the purpose you declare on the remittance form matters as much as the amount. Rather than work these numbers out by hand for your own figures, use our TCS calculator to model a specific remittance amount and purpose.

PAN, Form A2, and where 15CA/15CB fit in

Every LRS remittance requires your PAN — banks won't process one without it, independent of whether TCS applies (Reserve Bank of India, LRS FAQs, accessed 25 Jul 2026). You'll also complete Form A2, a declaration to your authorised dealer bank confirming the purpose of the remittance and that it's within LRS limits; this is a banking/FEMA formality, separate from your tax filing.

Form 15CA and Form 15CB — the certificates ordinarily required before remitting funds abroad that are chargeable to tax in the recipient's hands — do not apply to remittances made under the LRS for the personal purposes covered here (education, medical treatment, family maintenance, gifts, travel). Rule 37BB(3) of the Income Tax Rules exempts remittances by an individual that don't need prior RBI approval — which is what an LRS remittance is — from the 15CA/15CB requirement (Income Tax Department, Form 15CA FAQs and press release on amended Rule 37BB, accessed 25 Jul 2026). A naming note: with the Income-tax Act 2025 in force from 1 April 2026, these forms are being renumbered as Form 145 and Form 146, though the tax department's own guidance still mostly uses the old names, so your bank may say either. In practice, your bank's Form A2 plus your PAN is what's required — not the 15CA/15CB (or 145/146) paperwork that applies to other categories of outward remittance.

What happens once the money lands in Australia

This part sits outside Indian tax law and inside Australian tax law, and the two systems don't automatically talk to each other — nothing about paying TCS in India determines what, if anything, is taxable once the funds arrive.

Australia has no gift tax. If you're sending or receiving money from a relative as a genuine gift or a transfer of your own capital — savings, or the proceeds of an asset sale — it is not, on its own, assessable income for Australian tax purposes (Australian Taxation Office, Foreign and worldwide income, accessed 15 Jul 2026). The Centrelink rule that some remittance guides mistake for a "tax-free gift limit" — a $10,000-per-financial-year, $30,000-over-five-years cap — is a social security means-testing rule for Age Pension and other Centrelink payments, not a tax rule, and it's irrelevant if nobody involved is claiming a Centrelink payment (Services Australia, How gifting can affect your payment, accessed 15 Jul 2026).

Where it gets more involved is if the money isn't simply capital changing hands: if you're an Australian tax resident and the funds represent foreign-sourced income — rental income from an Indian property, interest, dividends, or a capital gain on an asset sold in India — that income is generally assessable in Australia regardless of whether or when you remit it, and the ATO expects it declared in your tax return (Australian Taxation Office, Foreign and worldwide income). The ATO has also flagged that it scrutinises large transfers characterised as "gifts" or "loans" from overseas relatives where the substance looks more like undeclared income, and expects supporting documentation — correspondence, bank records, a deed of gift — if a large transfer is ever queried (Australian Taxation Office, Gifts or loans from related overseas entities, accessed 15 Jul 2026).

The practical distinction is: capital moving as capital is generally not a taxable event on the Australian side; income is taxable whether or not it's remitted. Given how much rides on which category a specific transfer falls into — and on India-Australia double tax treaty relief where both countries have a claim on the same income — this is genuinely worth a conversation with a registered Australian tax agent rather than a general guide, particularly for a first large transfer after a move.

The bottom line

The RBI limit tells you how much you're allowed to send in a year; TCS tells you how much your bank collects upfront on a large transfer, at a rate that depends entirely on the purpose you declare — nil for loan-funded education, 2% for self-funded education and medical costs, and 20% for everything else above ₹10 lakh in FY2026-27. None of it is money gone for good: it's a credit against your Indian tax liability, refundable if you don't owe that much. What happens once the money is sitting in an Australian account is a separate question again, governed by Australian rules about capital versus income rather than anything collected in India.