Remitting Money Abroad Under LRS in 2026-27: Limit, Forex Margin Bar, TCS and Reporting
This article sets out how the RBI Liberalised Remittance Scheme (LRS) operates for resident individuals in financial year 2026-27, and how the remittance connects to tax collection at source under the Income-tax Act, 2025, return disclosure and accounting. The position is stated as reviewed on 14 October 2026.
The practitioner's exposure sits at the junction of three regimes: FEMA decides whether the money may leave, the Income-tax Act, 2025 decides what the bank collects on the way out, and the return and books decide what the assessee must report afterwards. Since 1 April 2026 the rate of collection changed for education and medical remittances, and the RBI directions on Form A2 processing were updated on 1 October 2026, so engagement files opened last year need to be re-read.
The governing framework
Who may use the Scheme and how the ceiling is counted
LRS is available to resident individuals. The ceiling is USD 250,000 (or its equivalent) per individual in each Indian financial year, 1 April to 31 March. It covers permitted current-account transactions, permitted capital-account transactions, or a combination of both.
The ceiling attaches to the individual, not to the bank, card or transfer. Earlier remittances in the year reduce the balance, and approaching a second bank does not create a fresh entitlement. The measure is the foreign-currency equivalent, not the rupee amount debited, so a rupee that has weakened between two remittances uses more of the rupee budget but the same dollar ceiling.
Points that regularly cause error:
- A minor may remit under the Scheme with the natural guardian's countersignature and subject to the bank's requirements.
- A company, partnership firm, trust or HUF cannot borrow an individual's allowance for its own remittance.
- "Person resident in India" under FEMA is not the same test as residence under the income-tax law. The authorised dealer has to establish the correct category, and a non-resident Indian must not be assumed to carry a resident allowance.
- Certain current-account needs, such as qualifying overseas medical treatment and education, may be facilitated above the standard amount where the prescribed supporting conditions are met and the authorised dealer is satisfied. That is a specific facility, not a general power to exceed the cap.
Permitted uses and the limits of the list
RBI identifies private travel, gifts and donations, maintenance of close relatives, studies abroad, medical treatment and specified capital-account transactions as potential uses. A listed purpose is not an exemption from any other law. Acquisition of overseas shares, for instance, may require examination of the Foreign Exchange Management (Overseas Investment) Rules, Regulations and Directions, 2022, including the line between portfolio and direct investment. A foreign bank account may be held for permitted transactions, but later investment activity through it must itself be lawful.
The nature of the payment decides the consequences that follow: