In the February 2025 budget, Finance Minister Nirmala Sitharaman increased the TCS-free limit under the Liberalised Remittance Scheme (LRS) from Rs 7 lakh to Rs 10 lakh. This means that you can now send up to Rs 10 lakh abroad without any additional tax.

This is especially a relief for those who spend a limited amount on international expenses in a year and do not want to get into the hassle of tax again and again.

Yes, if you send an amount of more than Rs 10 lakh, TCS (Tax Collected at Source) will be applicable — and this rate depends on the purpose for which the money is being sent. For example, money sent abroad for foreign travel or investment is usually charged 20% TCS.

Also read: RBI rules for sending money from India to foreign countries

Now the question arises, how much money can be sent abroad? So the answer is – a person can send a maximum of $2.5 lakh (about Rs 2 crore) abroad every financial year, as per RBI rules.

Overall, this change is beneficial for those who have limited international spending and want to plan their finances smartly by avoiding tax-related hassles.

But the big question is how to use this increased limit properly? Let us know some smart ways through which you can take full advantage of this new limit of Rs 10 lakh.

1. Invest in foreign stocks and mutual funds

The most financially impactful use of the enhanced tax-free LRS limit is investing in global markets. One can invest in the US and other global stock markets. ETFs (exchange-traded funds), international mutual funds, and index funds can also be explored as investment options.

Also read: Top 5 international mutual funds to invest in India – Delivered up to 97% returns in 1 year

2. Funding your child’s study abroad

If your child is studying abroad, then you can easily cover his or her tuition fees and living expenses with this amount. In many universities, partial or full fees can be paid with an amount of Rs 10 lakh. Sending money in installments throughout the year will also save tax and it will be easier to manage the budget.

3. Buy property abroad

Although it is not possible to buy a house for Rs 10 lakh, it can be used as a down payment. Countries like Dubai, Thailand and Portugal have good options for real estate investment. For seasoned investors and HNIs, the LRS window can also open the door to fractional ownership of real estate abroad and venture capital or private equity investments (in compliant jurisdictions).

4. Digital asset exposure through regulated global funds

The TCS-free LRS amount can be invested in digital assets through regulated global funds. But these should be handled with due diligence and professional advice. If invested wisely, they can form a valuable part of a well-diversified portfolio.

5. Plan your dream vacation

This LRS limit can be used to cover expenses for flight tickets, hotel bookings, cruise trips or business travel abroad. Also, now high-value travel experiences are no longer need to be split into multiple transactions to avoid TCS, as long as the annual spend stays within the new limit of Rs 10 lakh. People can also use this limit to do luxury shopping, buy artwork and collectibles.

6. Medical treatment abroad

Many Indians travel to countries like the US, Germany, Singapore and Switzerland for better medical treatment for serious diseases. If you need services like cancer treatment, advance surgery or wellness therapy, then this TCS free LRS limit of Rs 10 lakh can be used properly. Apart from this, you can also send it to financially help your close NRI relatives living abroad.

There are some restrictions from RBI as well. Transactions related to crypto trading and gambling are not valid under this limit. So, read the rules before sending money.

Also read: Major changes in TDS and TCS rules from April 1

Yogita Dand, Certified Financial Planner & Registered Mutual Fund Distributor, at Svarasa, shares some tips for maximising the LRS limit.

– Distribute across family members: Spouses and adult children can use their own Rs 10 lakh limits.

-Time your remittances smartly: Stagger across the year to avoid liquidity crunches or forex volatility.

-Maintain detailed records: Keep documentation for all overseas transactions to stay audit-ready.

-Seek professional guidance: Align LRS utilization with your overall wealth management strategy.

“The upward revision in the LRS limit is more than a technical adjustment — it is a signal of India’s maturing financial landscape and the growing aspirations of its global citizens. Whether you’re planning to invest, travel, educate, or support loved ones abroad, the enhanced Rs 10 lakh limit for FY26 offers greater financial freedom,” she said.

Compliance and tax considerations under LRS

-No TCS will apply to LRS remittances up to Rs 10 lakh per year per individual.

-Above Rs 10 lakh, TCS at 20% applies (5% for education or medical remittances if funded via loans).

-All foreign assets and income must be disclosed under Schedule FA in the annual income tax return.

-Capital gains from global investments are taxable in India; use DTAA benefits where applicable.

Summing up

The increased LRS limit offers a great opportunity for international spending and investments — if used wisely. Parents can send it for their children’s foreign education and investors can invest it in foreign stocks and real estate. Retired people can use it for medical expenses abroad. With the right planning, this Rs 10 lakh TCS-free limit under LRS can be used to meet one’s financial goals.