International Transfer Fees Under the Liberalised Remittance Scheme (LRS)
Most Indian residents who send money abroad under the Liberalised Remittance Scheme assume the fee on the receipt is the fee they are paying. The receipt line is almost never the whole story. Between the headline fee, the FX markup, the Goods and Services Tax on both, and the Tax Collected at Source that is prepaid tax rather than a true cost, a straightforward USD 5,000 tuition payment can carry four different numbers that need to be reconciled before you understand what the transfer actually cost you.
This guide walks through what each fee under LRS covers, how banks and apps bundle them differently, and how to read a quote so the final number does not surprise you. It is written for ordinary residents using LRS for permitted purposes, not for tax professionals or large corporates.
What LRS Covers, In One Paragraph
The Liberalised Remittance Scheme is the framework the Reserve Bank of India uses to let resident individuals send money abroad for permitted current account and some capital account purposes. The current ceiling is USD 250,000 per person per financial year across all purposes combined. Permitted purposes include education, medical treatment, family maintenance, gifts, travel, and a limited set of investment categories. Trade and most business transactions sit outside LRS and follow their own route.
Every authorised dealer that handles your transfer, which in practice means a bank or a licensed remitter, is required to collect the right documentation, apply the right FX rate, levy fees under its own schedule, add GST where applicable, and collect TCS on your behalf. That is a lot of moving parts for a single transfer, and the parts combine differently depending on the channel.
The Fee Components You Actually Pay
A single LRS transfer carries up to five separate line items. Understanding them individually is the only way to compare quotes honestly.
The first is the transfer fee. This is the flat or percentage charge the bank or remitter adds for processing your transfer. Public sector banks sometimes charge a flat fee that scales down for larger transfers. Private banks typically charge a percentage of the transfer amount with a minimum. Fintech remitters usually charge a percentage without a flat floor.
The second is the FX markup. This is the difference between the mid-market exchange rate, the one Google or Reuters shows, and the rate your bank or remitter actually quotes you. The markup is where most of the cost sits for retail remitters, and it is almost always invisible on the receipt. A 2 percent markup on a USD 10,000 transfer is INR 16,000 give or take, bigger than any flat fee.
The third is GST on the transfer. India levies GST on the convenience fee and sometimes on the FX portion of a remittance. Banks apply it in slightly different ways, so two institutions can quote the same transfer fee and still charge different final totals once GST lands.
The fourth is correspondent bank fees. If your transfer routes through SWIFT, intermediary banks between your sender and the recipient can deduct their own fees along the way. These are typically absorbed by the sending bank in bundled quotes but can show up as surprise deductions on the recipient side with cheaper services.
The fifth is TCS, Tax Collected at Source. Technically this is not a fee at all, it is a prepayment of your income tax that you reconcile against your return. We cover TCS mechanics in a separate guide, but you need to know the number so your cash flow matches your expectation.
Bank Fees vs App Fees
Public sector banks typically carry the lowest headline transfer fee and the widest FX markup. Private banks often charge a higher flat fee with a slightly tighter markup. Fintech remitters usually charge a transparent percentage fee and a much narrower FX markup, which is where most of their value sits.
| Line Item | Public Sector Bank | Private Bank | Fintech Remitter |
|---|---|---|---|
| Transfer fee | Low flat, often INR 500 to 1,500 | Higher flat or percentage with floor | Percentage, often 0.3 to 1.5 percent |
| FX markup over mid-market | 1.5 to 3 percent | 1 to 2 percent | 0 to 1 percent |
| GST on fees | Standard | Standard | Standard |
| Correspondent fees | Possible, variable | Usually bundled | Usually bundled |
| TCS | Collected per LRS rules | Collected per LRS rules | Collected per LRS rules |
The headline fee is the smallest number of the five. The FX markup is almost always the biggest. When you compare quotes, converting the markup into an INR figure for your specific transfer amount is the single most useful thing you can do.
A Simple Worked Example
Imagine a parent in Pune sending USD 10,000 to a child studying in Toronto. The mid-market rate on the day is INR 83.50 per USD. Three channels quote the transfer. The bank quotes INR 85.40 per USD plus a flat INR 1,500 fee. A second bank quotes INR 85.00 per USD plus INR 1,000 and a wire-out fee of INR 500. A fintech quotes the mid-market INR 83.50 per USD plus 0.5 percent of the transfer amount.
The first bank costs INR 19,000 in markup plus INR 1,500 in fees, so INR 20,500 before GST and TCS. The second costs INR 15,000 in markup plus INR 1,500 in fees, so INR 16,500. The fintech costs zero markup plus INR 4,175 as the 0.5 percent fee, so INR 4,175. The difference between the first bank and the fintech on this transfer is just over INR 16,000 for the same money moving to the same account.
Then GST applies to the fee portion in each case, and TCS at the applicable rate for the purpose code applies above the aggregate threshold. The TCS is reconciled at tax time and is not a true cost. GST on fees is a true cost and sits with the government.
Reporting Obligations You Should Not Skip
Every LRS transfer requires a Form A2 declaration, which captures the purpose of the remittance, the recipient details, and your PAN. For transfers above specified thresholds you also need Form 15CA, and in some cases a chartered accountant certified Form 15CB. The forms are matched against your bank statement, your Form 26AS, and your tax return. Inconsistencies between the forms do not usually block the transfer in real time, but they slow down future refunds and can trigger a reconciliation notice.
Keep a simple log of every outward remittance with the date, INR amount, USD amount, purpose code, and TCS collected. At return-filing time this one sheet pays for itself several times over.
Reality Check: The receipt your bank hands you after a wire is a partial document. The real cost of the transfer is the mid-market rate on the day, plus every line item added on top. Reconcile both before you decide a channel is cheap.
Where Sliq Pay Fits In
Sliq Pay is building an INR to USD LRS remittance product for permitted current account purposes like tuition, medical treatment, family maintenance, travel, and donations. It is not yet live for public use, but the design shows the full quote with mid-market FX, a transparent percentage fee, GST, and the applicable TCS calculated on the same screen before you confirm. The idea is that the number you see is the number you pay, no post-facto reconciliation trip to the branch.
For US-to-India transfers, which Sliq Pay already offers today, LRS does not apply because that direction is inward remittance into India, not outward from India.
Travel Tip: When you compare two LRS quotes, ask both channels for the final INR debit and the implied FX rate per USD on your exact transfer amount. Those two numbers together tell you everything the receipt will not.
FAQ
What is the LRS limit for outward remittance from India? The current ceiling is USD 250,000 per resident individual per financial year, across all permitted purposes combined. Different purpose codes can share the same annual cap.
Which fees under LRS are true costs and which are not? The transfer fee, FX markup, GST on fees, and correspondent fees are true costs. TCS is a prepayment of your income tax and is reconciled through your return, so it is a cash-flow item rather than a cost.
Why is the FX markup bigger than the transfer fee? Because the markup is calculated as a percentage of the full transfer amount, while the fee is often a small flat charge. On any transfer above about USD 3,000, the markup dominates the total.
Do public sector banks always come out cheapest for LRS transfers? No. Public sector banks often have the lowest headline fee but the widest FX markup. For most retail LRS amounts the markup matters more than the fee, so fintech remitters with narrow markups usually come out cheaper on the final INR debit.
Does GST apply to the full transfer amount? No. GST applies only to the fee and sometimes to the FX conversion portion, not to the principal being remitted. The exact slab depends on the transfer amount and the service classification.
Will I need Form 15CA and 15CB for a small transfer? Form 15CA is required above specified thresholds. Form 15CB, which needs a chartered accountant, applies above a higher threshold and for certain purpose codes. Your bank will tell you which forms your specific transfer needs before processing.
Can Sliq Pay help with my LRS outward transfer today? Not yet. Sliq Pay is building the INR-to-USD LRS product and plans to launch it for permitted current account purposes. The US-to-India consumer and business remittance products are live today for inward flows to India.
Before You Go
Before you authorise a large outward remittance, know your running total under LRS for the financial year across every channel tied to your PAN, pick the correct purpose code for the actual use of the funds, and ask for the final INR debit on your exact transfer amount rather than a quoted rate. Treat the FX markup as a line item, not an invisible background condition. The receipt will tell you what you paid, but only your own math on the mid-market rate will tell you what the transfer really cost.
Explore how Sliq Pay works for US-to-India remittance today, and watch for the LRS outward product launching soon for Indian residents sending money abroad.
Disclaimer: The information provided on this blog is for general informational purposes only and does not constitute legal, financial, tax, or professional advice. Product features, pricing, eligibility, and availability may vary by country, user type, regulatory requirements, and are subject to change. Please refer to Sliq Pay’s Terms of Use and official product pages for the most accurate and up-to-date information. Sliq Pay makes no representations or warranties regarding the completeness, accuracy, or reliability of the content.
