Last Updated on Aug 18, 2026 by Durga Mishra
If you invest in US stocks or send money abroad from India, these remittances generally fall under the Liberalised Remittance Scheme (LRS). Under LRS, resident individuals can remit up to $250,000 per financial year for permitted purposes such as overseas investments, education, travel and medical expenses.
TCS applies to certain foreign remittances under LRS once they cross the prescribed threshold.. Sometimes informally called a remittance tax, TCS is not a permanent cost. It is an advance tax collection that you can adjust against your final income tax liability while filing your ITR.
For investors sending money abroad to buy US stocks, understanding when TCS applies, how much gets collected and how to claim credit for it is especially important. This article explains the TCS rates effective from 1 April 2026, how they apply to overseas investment remittances under LRS and the steps involved in claiming the amount back.
Table of Contents
What is TCS on Foreign Remittance?
Tax Collected at Source (TCS) is tax collected when you send money abroad under the Liberalised Remittance Scheme. Your bank or authorised dealer collects it at the time of remittance and deposits it with the Income Tax Department against your PAN. Under the Income-tax Act, 2025, TCS on LRS remittances is covered under Section 394.
- TCS is not an extra fee or permanent tax cost. The amount collected appears in your tax records and can be adjusted against your final income tax liability. If the TCS paid is more than the tax you owe, you can claim the excess as a refund while filing your ITR.
- For LRS remittances, TCS generally applies once total remittances exceed ₹10 lakh in a financial year. The rate depends on why you are sending the money abroad. For purposes other than education or medical treatment, including overseas investments such as US stocks, TCS is generally 20% on the amount above ₹10 lakh.
- TCS is also different from TDS. TCS is collected when you make certain payments, while TDS is deducted from certain income payments made to you. Both can be adjusted against your final tax liability
TCS Rates on Foreign Remittances From 1 April 2026
The TCS rate depends on why you are sending money abroad. For most LRS remittances, TCS applies only after your total remittances cross ₹10 lakh in a financial year.
| Purpose | TCS Rate |
| Education funded through a qualifying loan from a financial institution | Nil |
| Education or medical treatment | Nil up to ₹10 lakh, 2% above ₹10 lakh |
| US stocks, foreign securities, gifts and other LRS purposes | Nil up to ₹10 lakh, 20% above ₹10 lakh |
| Overseas tour packages | 2% on the full amount, with no minimum threshold |
For example, if you remit ₹12 lakh to invest in US stocks, the 20% TCS applies only to the ₹2 lakh above the ₹10 lakh threshold, resulting in TCS of ₹40,000.
Note: The ₹10 lakh threshold is calculated on the aggregate LRS remittances made during the financial year, rather than separately for every transaction. TCS collected can later be adjusted against your final income-tax liability.
TCS Changes Introduced in Budget 2026
The Finance Act 2026 introduced two significant changes effective 1 April 2026.
- Higher TCS threshold: The limit for LRS remittances under “other purposes”, including US stock investments, increased from ₹7 lakh to ₹10 lakh per financial year. This means investors can remit up to ₹10 lakh for US stock purchases without TCS.
- Lower TCS on education remittances: Education remittances funded through a qualifying loan from a specified financial institution now attract nil TCS. For self-funded education, the rate is 2% on the amount above ₹10 lakh.
- The 20% TCS rate on other LRS purposes, including overseas investments, remains unchanged.
How TCS on US Stocks Works for Indian Investors
When Indian residents invest in US stocks, they send money abroad under the RBI’s Liberalised Remittance Scheme (LRS), which allows remittances of up to USD 250,000 per financial year for permitted purposes.
- US stock investments fall under “other LRS purposes”. TCS applies at 20% only on the cumulative remittance amount above ₹10 lakh in a financial year. For example, if you remit ₹15 lakh for US stock investments during the year, TCS applies to the ₹5 lakh above the threshold. At 20%, your bank would collect ₹1 lakh as TCS.
- This amount is not an additional investment cost. It is deposited with the Income Tax Department against your PAN and can be adjusted against your final income-tax liability when you file your ITR.
- The ₹10 lakh threshold applies to your aggregate LRS remittances during the financial year, rather than separately to each transaction. So, once your cumulative eligible remittances cross the threshold, TCS applies to the amount above it.
How TCS on Foreign Remittance is Collected?
TCS on foreign remittances is collected automatically by your bank when the outward transfer is processed. It is debited directly from your account along with the remittance amount, service charges, and applicable GST. Your account must have a sufficient balance to cover all these components before the transaction is processed; otherwise, the transfer will not go through.
TCS once collected by the bank cannot be refunded, even in the case of a transaction reversal, unless the reversal occurs on the same day as the original transfer. If a remittance is reversed after the TCS collection date, you will need to claim the TCS amount as a refund through your Income Tax Return.
Is TCS on Foreign Remittance Refundable?
Yes, the TCS on foreign remittance can be adjusted or refunded when you file your ITR. The bank or authorised dealer deposits the amount with the Income Tax Department against your PAN, and it appears in your tax records.
When you file your return, the TCS amount is adjusted against your total income-tax liability. If the TCS collected is more than the tax you owe, you can claim the excess as a refund. The refund does not come from the bank and is not processed separately. It is claimed through the normal ITR filing process.
How to Verify TCS Deducted on Your Remittances
You can check the TCS collected on your foreign remittances through the following tax records:
- Form 27D is the TCS certificate issued by your bank or authorised dealer. It shows the amount of TCS collected and deposited with the Income Tax Department.
- Form 26AS is your consolidated tax credit statement on the Income Tax e-filing portal. It shows the TDS and TCS reported against your PAN. Before filing your ITR, check that the TCS amount matches your Form 27D.
- AIS and TIS provide a broader view of financial transactions reported against your PAN, including foreign remittances and related TCS entries.
If there is a mismatch, get it corrected before filing your return so the correct TCS credit can be claimed.
How to Claim TCS When Filing Your ITR
TCS collected on foreign remittances can be adjusted against your final income-tax liability. Here’s how to claim it:
- Step 1: Get Form 27D from your bank or authorised dealer. It shows the TCS collected and deposited against your PAN.
- Step 2: Check Form 26AS on the Income Tax e-filing portal and make sure the TCS amount matches your records. TCS reported against your PAN appears in Form 26AS.
- Step 3: File the appropriate ITR. Investors who need to report foreign assets generally cannot use ITR-1. ITR-2 is generally applicable where there is no business or professional income, while ITR-3 applies where business or professional income is involved.
- Step 4: Claim the TCS amount under the relevant tax credit section in your ITR. It is then adjusted against your total tax liability.
- Step 5: If applicable, report your US holdings in Schedule FA. Resident taxpayers who are ordinarily resident in India generally need to disclose relevant foreign assets and foreign income.
- Step 6: If your total TCS credit exceeds your final tax liability, the excess can be claimed as a refund through your ITR.
Disclaimer: Tax rules and reporting requirements can change. Consider consulting a qualified tax professional for advice specific to your situation.
How to Avoid TCS on Foreign Remittance?
For investment and other eligible LRS remittances, TCS applies only after the applicable annual threshold is crossed. Therefore, if your cumulative remittances remain within ₹10 lakh in a financial year, no TCS applies to the amount within that threshold.
The threshold applies to cumulative eligible LRS remittances during the year, rather than separately to each transfer. If your remittances cross ₹10 lakh, TCS applies to the amount above the threshold.
If you plan to remit more than ₹10 lakh for US investments, TCS may therefore be collected. However, it is not necessarily an additional tax cost. You can claim the amount as tax credit when filing your ITR and receive a refund if the credit exceeds your final tax liability.
TCS Applicability for NRIs
The Liberalised Remittance Scheme is meant for resident individuals, including minors. Therefore, remittances made by NRIs generally do not fall under LRS simply because the money is being transferred abroad. NRIs may instead use the separate repatriation and remittance rules applicable to NRE, NRO and other non-resident accounts.
The exact tax treatment can depend on the account, source of funds and nature of the transfer, so NRIs should confirm the applicable rules with their bank or tax adviser before remitting funds.
Conclusion
TCS on foreign remittances can affect the cash flow of Indian investors sending money abroad, especially once LRS remittances cross the ₹10 lakh annual threshold. However, TCS is not an additional tax cost. It can be adjusted against your final income-tax liability or claimed as a refund through your ITR.
For US stock investors, it is important to track cumulative remittances, verify the TCS reflected in Form 26AS, and report foreign assets correctly while filing returns. Understanding these rules can help you plan remittances better and avoid surprises at tax-filing time.
Frequently Asked Questions About TCS on Foreign Remittances
What is TCS on foreign remittance?
TCS is an advance tax collected by your bank or authorised dealer when you make certain outward transfers under LRS. The amount is deposited with the Income Tax Department against your PAN and can be adjusted against your final tax liability when you file your ITR.
What is the TCS rate on foreign remittance for US stock investments?
For TCS on US stocks, no tax is collected up to the applicable ₹10 lakh annual threshold. A 20% rate applies to the amount above ₹10 lakh. The threshold applies cumulatively to eligible LRS remittances during the financial year.
Disclaimer: This is for informational purposes only. Please consult a tax professional for advice specific to your situation.
Is TCS on foreign remittance refundable?
Yes, the amount can be adjusted against your total tax liability when you file your ITR. If the TCS credit exceeds your final tax liability, you can claim the excess as a refund from the Income Tax Department.
How to avoid TCS on foreign remittance?
Keeping eligible cumulative LRS remittances within the ₹10 lakh annual threshold can prevent TCS from being triggered. If you cross the threshold, TCS applies to the amount above it and can later be claimed as tax credit.
Disclaimer: Please consult a qualified tax professional before making remittance or tax planning decisions.
What changed for TCS on US stocks after Budget 2026?
The annual threshold increased from ₹7 lakh to ₹10 lakh from 1 April 2026. The 20% rate on the amount above the threshold remains unchanged.
What changed in Budget 2026 for education remittances?
Education remittances funded through a qualifying loan from a specified financial institution now attract nil TCS. Self-funded education remittances above ₹10 lakh attract 2% TCS, lower than the earlier 5% rate above ₹7 lakh.
Does TCS apply to International Credit Card spending abroad?
No, international credit card spending while abroad is currently not treated as an LRS remittance for TCS purposes. Therefore, such overseas spending is generally outside the current remittance tax rules applicable to LRS transfers.
What documents do I need to track TCS on my remittances?
To track TCS on your remittances, you need to check Form 27D issued by your bank, Form 26AS on the Income Tax e-filing portal and your Annual Information Statement. These records help you verify the amount collected and ensure the correct tax credit is available when filing your ITR.
