Under the Liberalised Remittance Scheme, Indian residents can remit up to USD 250,000 per financial year for permitted current and capital account transactions. For Tax Year 2026-27, TDS under Section 206C(1G) applies at 20% on remittances exceeding INR 7 lakh in aggregate within the financial year, with the first INR 7 lakh exempt from withholding.
For remittances made for education purposes funded through an education loan from a recognised financial institution, the TDS rate is reduced to 0.5% on amounts above INR 7 lakh. Education remittances funded from own sources attract the standard 5% rate on the excess above INR 7 lakh, and medical treatment remittances are similarly taxed at 5%. These concessional rates are available only where the remitter furnishes the Authorised Dealer with appropriate documentation confirming the purpose.
Form 15CA and Form 15CB play a central role in the remittance process. Form 15CA is a self-declaration submitted by the remitter on the income tax portal before funds are transferred. Form 15CB is a certificate issued by a Chartered Accountant confirming the nature of payment and applicable tax treaty provisions, and is mandatory where the remittance exceeds INR 5 lakh and does not fall under the list of excluded transactions prescribed under Rule 37BB. Founders and individuals remitting for investments, gifts, or maintenance of relatives should ensure both forms are in order before instructing their bank to transfer funds, as Authorised Dealers are required to report remittances to the RBI and the income tax department.
