Union Budget 2025: Relief for Remittances as TCS Limit Raised to ₹10 Lakh : In a significant move to ease the financial burden on individuals sending money abroad, the Union Budget for the financial year 2025-26, presented by Finance Minister Nirmala Sitharaman on February 1st, introduced key changes to the Tax Collected at Source (TCS) on remittances. The government has raised the TCS threshold for international money transfers, bringing relief to many people sending funds for education, travel, medical expenses, and investments.
Key Announcement: TCS Limit Increased to ₹10 Lakh
Under the new budget provisions, the limit for TCS on remittances has been increased from ₹7 lakh to ₹10 lakh. This means that individuals who remit up to ₹10 lakh annually will no longer be subject to TCS, a move aimed at reducing the tax burden on small remittances sent abroad.
Previously, remittances exceeding ₹7 lakh were subject to TCS. The increase in the limit is particularly beneficial for individuals transferring funds for personal reasons such as children’s education, medical treatment, and travel, making the remittance process smoother and less expensive for many.
Details of TCS Rates for Remittances Above ₹10 Lakh
While the increased limit offers relief for smaller remittances, the government has maintained TCS rates for remittances exceeding ₹10 lakh. The TCS rates will vary depending on the purpose of the remittance:
- For medical expenses: The TCS rate will be 5%.
- For travel and foreign investments: A higher TCS rate of 20% will apply.
- For education-related remittances: There will be no TCS levied, as these funds are often sourced from educational loans.
This move helps ensure that remittances for educational purposes remain unaffected, as they are generally backed by loans, and the government is keen on encouraging educational opportunities abroad.
Impact of the Budget on the Liberalized Remittance Scheme (LRS)
The Liberalized Remittance Scheme (LRS) by the Reserve Bank of India, which previously set a ₹7 lakh annual limit for remittances, has also been aligned with the new ₹10 lakh limit. This ensures that more individuals can remit money abroad without the concern of facing TCS, especially for educational, travel, and medical expenses.
Special Tax System for NRIs in Electronics Manufacturing
The budget also proposed an innovative tax system aimed at Non-Resident Indians (NRIs) involved in providing services to domestic companies involved in electronics manufacturing hubs. This measure seeks to boost the electronics manufacturing sector and enhance investment opportunities in India.
| Key Point | Details |
|---|---|
| TCS Limit Increase | The TCS limit for remittances has been raised from ₹7 lakh to ₹10 lakh. |
| TCS for Remittances up to ₹10 Lakh | No TCS will be applied for remittances up to ₹10 lakh. |
| TCS on Remittances Exceeding ₹10 Lakh | TCS will apply on remittances exceeding ₹10 lakh in a financial year. |
| TCS Rates for Medical Expenses | TCS rate of 5% for remittances sent for medical expenses. |
| TCS Rates for Travel & Investments | TCS rate of 20% for remittances related to foreign investments and travel. |
| TCS for Educational Remittances | No TCS for remittances sent for educational purposes, as they are typically funded by loans. |
| LRS Limit | The Liberalized Remittance Scheme (LRS) limit aligns with the new ₹10 lakh limit. |
| NRI Tax System for Electronics Manufacturing | Proposed tax system for NRIs providing services to electronics manufacturing companies in India. |
Official Website
https://financialservices.gov.in/beta/en
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Conclusion
The Union Budget 2025-26 brings positive changes for individuals and families making remittances abroad, particularly those sending money for children’s education, medical needs, or travel. The raised TCS limit to ₹10 lakh and the exemptions for educational remittances will significantly ease the financial burden. These changes, coupled with the introduction of a tax system for NRIs in electronics manufacturing, are expected to create a more favorable environment for both remittance senders and the broader economy.
Tag : Union Budget 2025: Relief for Remittances as TCS Limit Raised to ₹10 Lakh