₹ TaxSetu 2025
TCS — Foreign Spending

TCS on Foreign Travel & Remittance (LRS): 2% vs 20% Rules (FY 2026-27)

Tour packages: flat 2%. Education/medical LRS: 2%. Other foreign remittances: 20% above ₹10L. TCS is not extra tax — claim it in your ITR like TDS (shows in 26AS).

TCS rates that hit individuals

Transaction (206C/394)ThresholdTCS
Overseas tour packageNo threshold2%
LRS — education / medicalAbove ₹10L2%
LRS — other purposes (invest, gifts…)Above ₹10L20%
Motor vehicle saleAbove ₹10L1%
Scrap / liquor / minerals / toll-parking—2% uniform
Example — ₹15L foreign portfolio investment via LRS
TCS = 20% × (₹15L − ₹10L)? No — 20% × full ₹15,00,000 = ₹3,00,000 collected by the bank. Claim the entire ₹3L as credit in your ITR (refund if your actual tax is lower).
Education-via-loan remittances have historically had relief — verify the current notification before big transfers. NRI angle: DTAA + 15CA/CB → · NRI guide →

TCS rates + the refund-wait reality

RemittanceTCS (indicative)Cushion
Foreign tour package20% (highest!)Minimal — confirm current trigger
Education (self-funded)5%₹7L/yr
Education (education LOAN)NilFull relief
Medical treatment abroad5%₹7L/yr
Example — ₹10L Europe tour
TCS @20% = ₹2,00,000 blocked with the government till your ITR is processed. It's fully adjustable/refundable (it sits in your 26AS as your credit), but expect the money back in months, not weeks. Budget the TCS into the trip cost — a ₹10L tour really needs ₹12L of liquidity.

Our take: LRS/TCS rules change almost every Budget — verify the current circular before any big remittance, and fund education via a loan where possible (nil TCS is a genuine, legal saving).

📌 Remember: TCS sits in YOUR 26AS as YOUR credit
That 20% tour TCS isn't a fee or a loss — it appears in your 26AS/AIS as tax credit in your name, adjustable against your total liability or fully refundable. Agents who say 'TCS is extra cost' are half-wrong: it's blocked CASHFLOW, not blocked money. Claim every rupee in the return, reconcile the TCS certificates with 26AS, and never let a tour operator 'adjust it informally' — off-book TCS adjustments evaporate at refund time.

By TaxSetu Editorial Team · Last reviewed: 7 October 2026

Based on the Income-tax Act 2025, Income Tax Rules 2026 and CBDT notifications; sections per the Income-tax Act 1961 (as amended) with 2025-Act mappings where notified · Verify on the official portal: incometax.gov.in

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Frequently Asked Questions

No — TCS is collected upfront but fully adjustable against your final tax; claim it in your ITR like TDS (it appears in 26AS) and get a refund if your tax is lower.

Education/medical: 2% above ₹10L. Other purposes (investing, gifts): 20% above ₹10L. Tour packages: flat 2%.

Loan-funded education remittances have historically had relief — verify the current notification before large transfers. NRI guide.