Editorial standards: how we source rates and handle corrections
What TCS on LRS is—and what it is not
Tax Collected at Source (TCS) is collected by an authorised dealer or other specified collector under Indian tax law. For an LRS payment, it is not a provider’s exchange-rate fee and it is not a Canadian remittance tax. It can affect cash flow at the time of an outward payment and must be reconciled with the Indian taxpayer’s records.
LRS concerns an eligible resident individual in India making an outward remittance for a permitted purpose. It should not be copied onto an inward Canada-to-India transfer. Start by identifying the direction, sender’s residency, purpose, financial year, and authorised dealer.
This article reports the current official Section 394 table located during the 16 September 2026 editorial pass. It is educational information, not an individual tax determination.
The current enacted table
The Income Tax Department’s current Section 394 table says that an LRS remittance, or aggregate of LRS remittances, exceeding ₹10 lakh in the financial year is subject to TCS. It lists 2% for purposes of education or medical treatment and 20% for purposes other than education or medical treatment.
The same table lists 2% for the purchase of an overseas tour programme package, including related travel, hotel, boarding, or lodging expenses described in the provision. Do not reuse an old table that splits tour packages into legacy 5% and 20% bands.
The threshold is an aggregate financial-year concept, not permission to treat each payment as a fresh threshold. Ask the authorised dealer how it tracks prior remittances and which documents support the stated purpose.
Why readers may see 5% on an official page
The Income Tax Department’s separate rendered TCS-rates page still shows legacy category wording: 5% for the general LRS category and 5%/20% for overseas tour packages. A search result or that page alone is not enough to support the current 2026 rate.
The current Section 394 page, last reviewed by the Department in the evidence captured for this pass, displays the amended table with 2% for education or medical treatment, 20% for other LRS purposes, and 2% for overseas tour packages. That is the source used in this article.
The 1 February 2026 PIB release described the change as a Budget proposal and said the Income Tax Act, 2025 would take effect on 1 April 2026. The enacted/current Section 394 page resolves the proposal-versus-law question for this editorial pass. We preserve the stale-page caveat in our methodology and the verification evidence file rather than hiding the discrepancy.
Education, medical treatment, and loan-funded payments
The 2% row is for education or medical treatment as classified under the current provision. A sender should retain an admission, fee, hospital, or other purpose document and ask the authorised dealer what evidence it accepts.
The official Finance Act 2025 highlights also described no TCS collection for a remittance in foreign currency from a qualifying education loan under Section 80E(3)(b). That is a conditional funding-source rule, not a blanket exemption for every education payment. Confirm how a mixed self-funded and loan-funded payment is treated.
If the dealer’s portal, bank instruction, and published legal table disagree, pause and ask for the current statutory basis and written calculation. Do not infer the answer from a third-party calculator.
How TCS interacts with a real transfer
Before confirming, ask the authorised dealer for the amount treated as LRS, the financial-year aggregate, purpose category, TCS rate, amount collected, and how the collection will appear in the taxpayer’s account. The dealer’s classification controls the transaction workflow.
Keep the remittance request, PAN and identity details where required, purpose documents, bank debit, TCS certificate or statement, and eventual Indian return records. TCS collection is not the same as the final tax on income or gains that funded the remittance.
For an outward payment from India to Canada, read the large-transfer guide and amount-specific large INR guide. For a Canada-to-India inward transfer, read the NRI tax guide instead.
Avoid three common mistakes
First, do not use ₹7 lakh as the current threshold; the official current table uses ₹10 lakh. Second, do not use 5% for education or medical treatment after the 2026 amendment shown in Section 394. Third, do not call a Canada-to-India inward transfer an LRS remittance without checking direction and residency.
Do not treat TCS as a provider fee or as proof that the underlying money is taxable income. Also do not split a legitimate payment solely to avoid a collection or reporting process. Ask an adviser about lawful timing and documentation instead.
Tax rules and portal pages can change. If the official provision, portal calculation, and bank explanation do not align, use the newest enacted provision and obtain professional confirmation before sending.