LRS Limit and TCS for Investing in US Stocks — What You Actually Pay Upfront

A real Budget 2026 change reduced TCS for education and medical remittances — but investment remittances, including for US stocks, weren't included in that relief. Here's the current, accurate picture.

The LRS Limit, Current and Unchanged

Resident individuals, including minors, can remit up to USD 250,000 per financial year (April-March) under the RBI's Liberalised Remittance Scheme, for permitted purposes including investment in foreign stocks and ETFs. This is a cumulative limit across all your LRS purposes combined — if you're also remitting for a child's education or travel in the same year, it all counts against the same USD 250,000 ceiling.

The TCS Threshold and Rate — Investment Specifically

This is the part worth getting exactly right, since a recent Budget change created a genuine distinction by purpose: the TCS-free threshold remains ₹10 lakh per financial year (raised from ₹7 lakh in Budget 2025) across all LRS remittances combined. Above that ₹10 lakh threshold, investment remittances — including for buying US stocks — are taxed at 20% TCS. This is meaningfully different from education and medical remittances, which Budget 2026 reduced to just 2% above the same threshold. If you've seen headlines about "TCS relief" recently, check carefully whether it actually applies to your purpose — for US stock investing specifically, the relief does not apply.

A Worked Example

TCS Is Not a Final Cost — It's Reclaimable

This is genuinely important and often misunderstood: TCS is an advance tax collection, not an additional final tax. The amount collected shows up in your Form 26AS and AIS, and you can offset it against your total income tax liability when filing your ITR. If your actual tax liability is lower than the TCS collected, you receive the difference as a refund. It affects your cash flow at the time of remittance, not your ultimate tax burden.

Practical Implications for Planning Your Remittances

• Track your cumulative LRS usage across the financial year, and across all banks if you use more than one for remittances, since the ₹10 lakh threshold is aggregate, not per-bank
• Factor the 20% upfront TCS into your cash flow planning, even though it's recoverable — a large one-time remittance for investment will tie up that 20% until you file your return and claim the credit or refund
• Consider whether spreading large investments across financial years makes sense for your specific cash flow situation, keeping in mind this is a cash-flow consideration, not a way to avoid genuine tax liability

The Bottom Line

US stock investment remittances face a real, current 20% TCS above ₹10 lakh annually — a meaningfully different (and higher) rate than the relief Budget 2026 gave to education and medical remittances. Plan your cash flow around this, and remember it's a reclaimable advance tax, not a permanent cost, when filing your return.