TCS on Money Sent Abroad Drops to 2% From 1 April 2026

From 1 April 2026, the tax collected at source on education and medical remittances under the Liberalised Remittance Scheme falls from 5% to 2%. Overseas tour packages sit at 2%. The change is for residents sending money out of India, and it is worth knowing where it stops for an NRI.

This one gets shared in NRI groups as if it were an NRI tax cut. It is not. It is a resident's rule, and the line between the two regimes is the whole point.

What changed

Under the Finance Act 2026, the TCS rates on outward remittances under the Liberalised Remittance Scheme (LRS) were revised with effect from 1 April 2026:

The ₹10 lakh no-TCS threshold, set in the previous budget, stays.

Who this helps

The LRS is the channel a person resident in India uses to send money abroad, up to USD 250,000 a financial year. So the relief lands with:

If you are an NRI living abroad, the LRS is not your channel and this TCS change is not your bill.

Why it does not touch your property repatriation

When an NRI sells property in India and sends the proceeds out, that is not an LRS remittance. It runs through the NRO account, inside the RBI's USD 1 million per financial year limit, with the remittance certificate (now Form 146) and the tax already settled. LRS and NRO repatriation are two separate tracks. The TCS cut changes the first, not the second.

If your money home runs on the NRO track, the path is unchanged. We set it out in repatriating sale proceeds through the NRO route and the remittance-certificate guide.

FAQ

What is the new TCS rate on foreign remittances from 1 April 2026? For education and medical remittances under the LRS, 2% on the amount above ₹10 lakh a year, down from 5%. Tour packages are 2% with no threshold. Other remittances above ₹10 lakh stay at 20%.

Does an NRI pay this TCS when repatriating property sale proceeds? No. Repatriation of sale proceeds runs through the NRO account under the RBI's USD 1 million limit, not the LRS. This TCS change is for residents using the LRS.

Is the ₹10 lakh threshold gone? No. The ₹10 lakh per financial year no-TCS threshold for most LRS remittances stays in place.

Returning to India and untangling resident vs NRI rules?

66 MG Road helps NRI and returning-NRI owners keep the two regimes straight: what runs through the NRO account, what runs through the LRS, and what each one taxes. We operate in Mumbai, Pune, Bangalore, Hyderabad, Chennai, and Gurgaon. See repatriating sale proceeds or request a proposal.

66 MG Road newsdesk

Sources