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Informist, Saturday, Feb. 1, 2025

NEW DELHI - The Union Budget for 2025-26 (Apr-Mar) has hiked the threshold for tax collection at source for remittances under the Reserve Bank of India's Liberalised Remittance Scheme by more than 40% to INR 1 million. In addition, remittances made under the scheme for education-related purposes will not see any collection of tax at source.

Until now, remittances made under the aforementioned scheme for education purposes attracted a tax collected at source of 0.5% on amounts above INR 700,000 in case the source of funds is an education loan. If self-funded, the tax collected at source is 5%.

"The threshold to collect tax at source (TCS) on remittances under RBI's Liberalised Remittance Scheme (LRS) is proposed to be increased from INR 700,000 to INR 1 mln. I also propose to remove TCS on remittances for education purposes, where such remittance is out of a loan taken from a specified financial institution," Finance Minister Nirmala Sitharaman said on Saturday in her Budget speech.

The Liberalised Remittance Scheme allows residents to take out up to $250,000 every financial year for permitted current and capital account transactions. The tax collected at source applicable for remittances under the scheme is 20% for the amount in excess of the threshold, which now stands at INR 1 mln.  End

US$1 = INR 86.60

Reported by Siddharth Upasani

Edited by Vandana Hingorani

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