First, the limit: USD 250,000 a year, per parent
The Liberalised Remittance Scheme lets a resident individual send up to USD 250,000 abroad in a financial year for almost any legitimate purpose, education, living costs, a gift, a property deposit. The limit is per person, per year, so two parents together can remit up to USD 500,000 if the funds are genuinely each of theirs.
For most families the ceiling is generous and rarely the binding constraint. It mainly matters for a one-off large transfer. A full year of fees at an expensive university or a property deposit, which is why planning timing across both parents and across financial years helps.
The LRS limit and the TCS are two separate things: the limit is how much you may send; the TCS is the tax collected on part of what you do send. A remittance can be well within the limit and still attract TCS.
The TCS: only on what you send above ₹10 lakh, and the rate depends on why
TCS applies only on the amount you remit above ₹10 lakh in a financial year. Send ₹8 lakh and no TCS arises; send ₹15 lakh and TCS applies only to the ₹5 lakh above the threshold, not the whole ₹15 lakh.
The rate on that excess depends on the purpose, and this is where parents most often overpay by not flagging it correctly:
| Purpose of the remittance | TCS rate on the amount above ₹10 lakh |
|---|---|
| Education or medical treatment | 2% |
| Education funded by an Indian education loan (Section 80E) | Nil, no TCS at any amount |
| General, gift, living costs, property, investment | 20% |
The gap between 2% and 20% makes the classification matter. Tuition and associated living costs while studying fall in the education bucket at 2%. A plain gift or a flat deposit is general at 20%. Education funded by a loan from a recognised Indian financial institution carries no TCS at all. A meaningful reason to route education through an eligible loan where it makes sense.
The big point: TCS is your tax paid early, not a cost
The single most important thing to understand: TCS is not money lost. It is your own income tax collected in advance and parked against your PAN. It appears in your Form 26AS and Annual Information Statement (AIS), exactly like TDS on salary.
When you file your income tax return, that TCS is set off against your total liability. If you owe tax, it reduces what you pay. If the TCS exceeds your liability, common when 20% of a large remittance dwarfs a retired parent's actual tax. The excess comes back as a refund. A 20% collection on a general remittance is an interest-free advance of your own money, recovered at filing; not a 20% tax on sending money to your child.
The two things that turn this into actual recovery: the TCS must be tagged to your correct PAN at the time of remittance (so it lands in your 26AS / AIS), and you must file a return to claim the credit. A parent who never files, or whose PAN was mis-keyed by the bank, is the one who loses the money.
What a CA sets up so the remittance is clean and the TCS comes back
Most of the value is in getting things right before the money leaves. A CA looks at the purpose of each remittance and makes sure it is classified correctly, education at 2% rather than general at 20% where it genuinely qualifies, or routed through an eligible loan for nil TCS. Getting the purpose right at source is the difference between a small collection and a large one.
On recovery, the CA confirms the TCS is against the right PAN in Form 26AS and the AIS, then claims it as a credit in the parent's return, reducing tax or returning as a refund. For a retired parent with little other income this is frequently a full refund.
Where funding is large or spans a year, the CA also plans timing across both parents' USD 250,000 limits and financial years, and keeps the gift documentation clean. A remittance to an adult child abroad is itself an exempt gift between relatives.
A worked example: the Sharma parents funding their daughter's master's
Ramesh and Sunita Sharma, both resident in India, are funding their daughter Neha's master's degree in Canada, roughly ₹25 lakh of tuition and ₹10 lakh toward living costs and a small gift, ₹35 lakh in the year.
Tuition and living costs are an education remittance. The first ₹10 lakh carries no TCS; the education amount above that attracts just 2%. Had the whole ₹35 lakh gone as a plain gift, the amount above ₹10 lakh would have attracted 20%. A far larger collection.
Whatever TCS the bank collects lands in the Sharmas' Form 26AS. When they file, it is set against their tax; because their taxable income is modest, much of it comes back as a refund. They split remittances across both LRS limits, make sure the bank tags the education purpose correctly, and keep the university invoices on file. Nothing here is a tax on helping their daughter. It is their own tax, paid early and recovered at filing.