1. Overview of RBI LRS & Section 206C(1G) TCS Rules
Under the Reserve Bank of India (RBI) Liberalised Remittance Scheme (LRS) and Section 206C(1G) of the Indian Income Tax Act, resident individuals sending funds out of India to Canada are subject to Tax Collected at Source (TCS).
Key Policy Highlights & Benchmarks
- ₹7 Lakh Threshold Exemption: No TCS is collected on the first ₹7 Lakhs (INR) of total foreign outward remittances made during an Indian financial year (April 1 to March 31)
- 20% High TCS Rate: Remittances exceeding ₹7 Lakhs for general purposes (buying property, family maintenance, investments) are subject to a 20% TCS rate
- Education & Medical Concessions: Education remittances funded by an approved education loan incur a discounted 0.5% TCS rate; self-funded education incurs a 5% TCS rate
- TCS Credit Refund: TCS is NOT a final tax; it is fully creditable against Indian income tax liabilities or refundable upon filing an Indian ITR return
Mandatory Action Checklist
✓Determine remittance purpose code (Education, Family Maintenance, Real Estate)
✓Obtain Form 15CA and Form 15CB (Chartered Accountant certificate) for non-resident transfers
✓File Indian Income Tax Return (ITR) to claim 100% refund of collected TCS
2. Indian Remittance Purpose & TCS Rate Matrix
Comparing TCS rates across remittance categories.
| Remittance Purpose Category | TCS Rate (Up to ₹7 Lakhs) | TCS Rate (Exceeding ₹7 Lakhs) | Required Tax Clearance Document |
|---|---|---|---|
| Education (Funded by Bank Loan) | 0% TCS | 0.5% TCS | Bank Loan Sanction Letter + Form 15CA |
| Education (Self-Funded / Tuition) | 0% TCS | 5.0% TCS | University Admission Letter + Form 15CA |
| Medical Treatment Abroad | 0% TCS | 5.0% TCS | Hospital Invoice + Form 15CA |
| General Family Maintenance / Gifting | 0% TCS | 20.0% TCS | Form 15CA & Form 15CB |
| Overseas Investments & Property | 0% TCS | 20.0% TCS | Form 15CA & Form 15CB |
3. Form 15CA & Form 15CB Requirements for NRIs
Clearing Indian tax requirements for overseas transfers.
Key Policy Highlights & Benchmarks
- Form 15CA Online Filing: Declaration submitted on the Indian Income Tax e-filing portal by the remitter certifying tax has been deducted
- Form 15CB CA Certification: Mandatory Chartered Accountant certificate required for remittances exceeding ₹5 Lakhs if taxability applies
- NRE / NRO Account Remittances: Repatriation from NRE accounts is 100% tax-free with no LRS limit; NRO account repatriation is capped at $1,000,000 USD per financial year
- Claiming TCS Refunds: Resident parents who pay 20% TCS when transferring money to Canadian students can claim full refunds by filing Indian ITR-1 or ITR-2
Critical Regulatory NoteTCS REFUND CLAIM: TCS is a refundable advance tax; remitting parents should file an Indian Income Tax Return (ITR) to receive a 100% refund of TCS paid.
4. Step-by-Step Remittance Roadmap
Executing remittances.
Mandatory Action Checklist
✓Provide PAN card and Form 15CA/CB to remitting Indian bank
✓Execute wire transfer to Canadian bank account
✓File Indian ITR to claim TCS refund
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Frequently Asked Questions (FAQs)
The TCS rate is 20% on the portion of general remittances exceeding ₹7 Lakhs per financial year.
Remittances funded by an education loan from a financial institution incur a reduced 0.5% TCS rate on amounts over ₹7 Lakhs.
TCS is NOT a final tax; it is an advance tax credit that can be 100% refunded by filing an Indian Income Tax Return (ITR).
Form 15CB is an official tax certificate issued by an Indian Chartered Accountant verifying tax compliance for foreign remittances.
The RBI LRS limit is $250,000 USD per resident individual per financial year.
NRIs can repatriate up to $1,000,000 USD per financial year from their NRO accounts after filing Form 15CA/15CB.
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LRS & TCS Metrics
Standard TCS Rate
20% TCS (Remittances > ₹7 Lakhs)Education TCS Rate
0.5% (Loan) / 5% (Self-Funded)Exemption Threshold
₹7 Lakhs per Financial YearAnnual LRS Limit
$250,000 USD per Individual / YearExplore All 87 Visa Guides
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