LRS limit 2023: Full list of transactions on which TCS applies under Liberalised Remittance Scheme

The Government has brought overseas expenses by Indians through International Credit Cards under the ambit of Liberalised Remittance Scheme (LRS). To this effect, the Government on May 16 removed Rule 7 of the FEM (CAT) 2000 rules that exempted the use of international credit cards abroad from the LRS.

Under LRS rules, an individual is allowed to make remittances up to USD250,000 for several transactions (see list below). Any remittance above this limit requires prior approval from the Reserve Bank of India (RBI).

Following is the full list of transactions on which the LRS limit applies, according to Finance Ministry.

“As per Rule 5 of the FEM (CAT) Rules 2000, Individuals can avail of a foreign exchange facility for the following purposes, within the LRS limit of USD 250,000 on a financial year basis. Prior approval of the Reserve Bank of India would be required for remittances exceeding the specified limits,” the Finance Ministry said on Thursday (May 18, 2023)

1. Private visits to any country (except Nepal and Bhutan)
2. Gift or donation
3. Going abroad for employment
4. Emigration
5. Maintenance of close relatives abroad
6. Travel for business, attending a conference or specialised training or for meeting expenses for meeting medical expenses, or check-up abroad, or for accompanying as an attendant to a patient going abroad for medical treatment/check-up
7. Expenses in connection with medical treatment abroad
8. Studies abroad
9. Any other current account transaction.

Overseas payments with international credit cards would now be subject to the LRS limit effective May 16, 2023. Also, 20% TCS will apply to foreign remittance through the Liberalised Remittance Scheme and on the sale of overseas tour packages under Sub-section (IG) of Section 206C of the Income Tax Act 1961.

Also Read: Why did Modi Govt change international credit card payment rules? FinMin explains

TCS doesn’t apply to all transactions

However, TCS does not apply to all remittances made abroad. It is applicable only to remittances that are covered under LRS, according to the Ministry. Also, the TCS rate is not same for all transactions under LRS.