Question 1

What is the annual LRS limit under FEMA?

Accepted Answer

The Liberalised Remittance Scheme (LRS) allows resident individuals to remit up to USD 250,000 per financial year (April-March) for permitted current or capital account transactions like education, travel, medical treatment, gifts, investment abroad, and property purchase.

Question 2

What is TCS on foreign remittance?

Accepted Answer

Tax Collected at Source (TCS) applies on foreign remittances: 0.5% for education (0% if education loan from bank), 0.5% for travel up to Rs. 7 lakh and 5% above, and 20% for investments abroad. TCS is adjustable against your income tax liability when filing ITR.

Question 3

Is GST applicable on foreign remittance charges?

Accepted Answer

Yes, GST at 18% applies on bank forex conversion charges and remittance service fees. However, the remittance amount itself is not subject to GST. Some banks include GST in their forex margin while others charge it separately.

Question 4

What documents are required for LRS remittance?

Accepted Answer

Required documents include: PAN card, passport copy, Form A2 declaration, purpose-specific documents (admission letter for education, tickets for travel, property documents for investment), and CA certificate for amounts above Rs. 5 lakh or as per RBI guidelines.

Question 5

Can I claim TCS credit in my income tax return?

Accepted Answer

Yes, TCS paid on foreign remittance is fully adjustable against your income tax liability. It appears in Form 26AS. If TCS exceeds your tax liability, you can claim refund by filing your ITR.

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