India's RBI Liberalised Remittance Scheme and Sending Money for US Tuition

What the Liberalised Remittance Scheme covers

The Reserve Bank of India's Liberalised Remittance Scheme, LRS, lets an Indian resident individual send up to 250,000 US dollars abroad per financial year for permitted purposes, including a child's education, according to the Reserve Bank of India . The financial year runs from April 1 to March 31, and the limit applies per person, not per family, so both parents each have their own 250,000 dollar allowance.

Your bank processes the remittance as an authorized dealer. You submit Form A2, your PAN, and proof of purpose, such as your I-20 or an admission and fee letter from your US university.

How TCS applies to education remittances

Tax Collected at Source, TCS, is a percentage your bank collects upfront and deposits with the government whenever you remit money under LRS above a threshold. As of August 2026, the threshold is 10 lakh rupees per financial year across all your LRS remittances combined, not per transfer.

• Below 10 lakh rupees in the financial year: no TCS applies.

• Above 10 lakh rupees, self-funded education: TCS applies at 2 percent on the amount over the threshold, down from the earlier 5 percent rate starting April 1, 2026.

• Above 10 lakh rupees, education funded through a loan from a bank or a financial institution notified under Section 80E: a lower or nil TCS rate applies to the loan-funded portion.

The exact rate depends on whether the money is loan-funded, and banks apply the current circular directly, so confirm the figure and paperwork with your family's authorized dealer bank before you remit. Two large Indian banks published their own updated TCS notices for families to check, including Standard Chartered India and HDFC Bank .

TCS is a tax credit, not an extra cost

TCS collected on your remittance is not money you lose. It shows up as a credit in Form 26AS and offsets your family's income tax liability for that year, or gets refunded if your family owes less tax than the TCS collected. Keep every TCS certificate your bank issues, since your family's chartered accountant needs it to file the claim.

How families structure tuition payments around LRS

• Split large annual costs across both parents' individual LRS limits when a single semester or year's cost is high.

• Time remittances around the financial year boundary, since the 10 lakh TCS threshold and the 250,000 dollar cap both reset every April 1.

• Use an education loan for part of the cost if the loan-funded TCS treatment favors your situation, and confirm this with your bank first.

• Pay large one-time costs like a full year's tuition directly to the university's international payment portal, which many US schools operate through Flywire or a similar platform, rather than through informal channels.

Why the scheme exists and what it does not cover

The RBI introduced LRS in 2004 to let resident individuals move money abroad for approved personal purposes without seeking case-by-case central bank approval. It covers education, medical treatment, travel, and gifts to relatives, among other purposes, but it does not apply to companies, partnerships, or trusts, and it does not let a resident buy foreign lottery tickets or fund activities the RBI treats as prohibited.

Documents your bank will typically ask for

• A completed Form A2 declaring the purpose of the remittance.

• Your PAN card, required for any LRS transaction regardless of amount.

• Your I-20 or an official admission and fee letter from your US university stating the amount due.

• Proof of the source of funds, such as salary slips, savings statements, or loan sanction letters, if your bank's compliance team asks for it.

Planning across a multi-year degree

The 250,000 dollar LRS limit and the 10 lakh TCS threshold both reset every financial year, not once for your entire degree. A four-year undergraduate program does not need a single lump sum approval. Instead, plan each year's tuition and living cost remittance separately, and factor in that a scholarship, assistantship, or on-campus job income once you arrive in the US reduces how much your family needs to send from India in later years.

If your remittance needs exceed the annual limit

A 250,000 dollar limit per person per year covers almost every US degree cost when both parents remit, but a family with a very expensive program and other LRS uses in the same year, such as a property purchase or medical treatment, can approach the combined cap. Remittances above the LRS limit need specific RBI approval through your bank, which takes longer, so plan large transfers with margin rather than waiting until you are near the ceiling.

Before you remit

TCS rates and thresholds have changed more than once in recent years and may change again. Confirm the current rate, threshold, and required paperwork with your authorized dealer bank and check the Income Tax Department website before a large remittance, rather than relying on last year's rate.