TCS on outward remittance under LRS, effective April 1, 2025
Comparative table showing the changes in TCS on outward remittance under LRS, effective April 1, 2025, compared to the old provisions (effective from October 1, 2023 – March 31, 2025):
TCS on Outward Remittance Under LRS – Old vs. New Provisions
| Category | Old Provision (1 Oct 2023 – 31 Mar 2025) | New Provision (Effective 1 Apr 2025) | Key Changes |
|---|---|---|---|
| TCS Threshold (Exemption Limit) | ₹7 lakh per financial year | ₹10 lakh per financial year | ✅ Threshold increased by ₹3 lakh, reducing tax burden on smaller remittances. |
| Education (Funded by Loan from a Financial Institution) | Up to ₹7 lakh: No TCS Above ₹7 lakh: 0.5% on the excess amount | Up to ₹10 lakh: No TCS Above ₹10 lakh: 0.5% on the excess amount | ✅ Threshold raised, but TCS rate remains unchanged at 0.5% for excess. |
| Education (Self-Funded or Non-Qualifying Loan) | Up to ₹7 lakh: No TCS Above ₹7 lakh: 5% on the excess amount | Up to ₹10 lakh: No TCS Above ₹10 lakh: 5% on the excess amount | ✅ Threshold increased by ₹3 lakh; TCS rate remains the same. |
| Medical Treatment | Up to ₹7 lakh: No TCS Above ₹7 lakh: 5% on the excess amount | Up to ₹10 lakh: No TCS Above ₹10 lakh: 5% on the excess amount | ✅ Threshold increased by ₹3 lakh; TCS rate remains the same. |
| Overseas Tour Packages | No threshold exemption 5% TCS on all amounts up to ₹7 lakh 20% TCS on amount exceeding ₹7 lakh | Up to ₹10 lakh: 5% TCS Above ₹10 lakh: 20% TCS (Possibly on full amount, subject to clarification) | ✅ Threshold increased but 20% TCS applicability on entire amount above ₹10 lakh needs confirmation. |
| Other Purposes (Investments, Gifts, Travel, etc.) | Up to ₹7 lakh: No TCS Above ₹7 lakh: 20% on excess amount | Up to ₹10 lakh: No TCS Above ₹10 lakh: 20% on excess amount | ✅ Threshold increased by ₹3 lakh; TCS rate unchanged. |
| International Credit Card Payments (Overseas) | Exempted from LRS (as per Finance Ministry clarification in June 2023) | No change (but subject to future policy updates) | 🔍 Clarification may be needed for long-term applicability. |
| Business Remittances (Non-LRS) | Not applicable under LRS | No change | 🚫 TCS does not apply to business transactions (handled separately under TDS rules). |
Key Takeaways:
- Higher Exemption Limit (₹10 lakh) → Less immediate tax burden for remitters.
- Education & Medical Remittances → Still 5% TCS above the new threshold, but loans from financial institutions get a reduced 0.5% rate.
- Other General Remittances → 20% TCS on amounts exceeding ₹10 lakh, same as before.
- Overseas Tour Packages → 5% TCS up to ₹10 lakh, but above ₹10 lakh, 20% may apply on the entire amount (subject to clarification).
- International Credit Card Transactions Exempted (for now).
Also Read:
- Recommendations of the 55th Meeting of the GST Council
- Changes in GST and Income Tax during the Financial Year 2024-25
- TDS and TCS provisions applicable from April 1, 2025
- Rationalizing TDS: A Deep Dive into Budget 2025’s Proposals
Go To Memorandum
Go To Finance Bill 2025
Read More on Union Budget 2025
CA Cult YouTube:
1. TCS Credit of minor in the hands of Parent | Clubbing | Union Budget 2024
2. Calculation of Income Tax FY 2024-25 | Old vs New Regime | For Salaried Employees
Also Read: New Income-tax Bill 2025 Navigator
