The Union Budget 2025 has introduced notable revisions to the Liberalized Remittance Scheme (LRS), directly impacting Indian travelers, students, and medical tourists. Among the key modifications is the revision of the Tax Collected at Source (TCS) threshold, which has been increased from ₹7 lakh to ₹10 lakh under the LRS framework. In her Budget 2025 speech, Nirmala Sitharaman also proposed to remove TCS on money sent for educational expenses when the funds come from a loan taken from a specific financial institution.
TCS is a type of advance tax collected at the time of transactions, including selling goods or sending money abroad. When you send money overseas and that crosses a certain threshold, you must pay an advance tax to the financial institution handling the transaction. This tax is not an extra payment; it is an advance that you can balance against your tax when you file your income tax return (ITR).
When the total tax liability exceeds the amount of tax already deposited, the taxpayer must pay the remaining balance to the tax department when filing their Income Tax Return (ITR). If the tax liability is less than the tax deposited, the taxpayer is entitled to receive a tax refund.
The current TCS limit has been updated from ₹7 lakh to ₹10 lakh, which means if you transfer more than ₹10 lakh, you must pay TCS to the particular financial institution to deposit to the tax department.
TCS Exemption for Education Loans Under New Provision: Remittances for educational purposes funded through loans from specified financial institutions are now exempt from TCS, providing financial relief to students pursuing studies abroad.
The increased threshold makes outbound travel more affordable, as individuals can now remit higher amounts without facing additional tax burdens. Students pursuing education abroad and patients seeking medical care overseas benefit from reduced tax deductions on tuition and treatment expenses. Businesses paying for overseas services or investments enjoy a greater limit before TCS becomes applicable.
Foreign exchange earnings from inbound tourism play a vital role in strengthening India’s economy. The Budget 2025 has introduced measures to enhance India’s forex inflows through tourism development, making the country more appealing to global visitors.
These policy shifts will influence the forex industry in India. Some key impacts include:
The Budget 2025 is expected to significantly impact tourism and medical travel, creating positive economic ripples across various sectors. Anticipated economic advantages include:
The increase in the TCS threshold under LRS from ₹7 lakh to ₹10 lakh provides relief to outbound travelers, allowing them to make international remittances more tax-efficiently. Simultaneously, India’s focus on tourism and medical travel will strengthen forex inflows and fuel economic growth.
With strategic policy changes, infrastructure investments, and business-friendly reforms, India is on track to becoming a premier global destination for both leisure and medical tourism.
These changes present new opportunities for financial planning and international engagement for travelers, businesses, and investors. The Budget 2025 lays the foundation for a travel-friendly and forex-positive economy, benefiting Indian citizens and international tourists.
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