International Transfer Fees Under the Liberalised Remittance Scheme (LRS)
An Indian parent paying US tuition for a child, a resident sending family maintenance to a relative abroad, a traveler loading foreign currency before a trip: all three transactions share a single regulatory framework, the Liberalised Remittance Scheme (LRS). Set by the Reserve Bank of India, LRS defines what resident Indians can send abroad, how much, for what purposes, and through which channels. It also defines the fee stack that every outbound rupee carries. Understanding that stack is the difference between an all-in cost of less than one percent and an all-in cost north of four percent on the same transfer.
This piece walks through the LRS-permitted transaction categories, the specific fee components that apply to outbound LRS flows, how bank costs compare to app costs on the India side, and the reporting obligations that come with every LRS remittance. Sliq Pay is building a dedicated India-to-US LRS product with mid-market exchange rates and a transparent per-transfer fee for the permitted use cases this guide covers.
Permitted transactions under LRS
LRS is a current-account-first framework. The Reserve Bank of India allows resident individuals to remit up to US$ 250,000 per individual per financial year for a defined set of purposes without needing specific RBI approval. Two parents can each use their own limit, which effectively doubles the household headroom.
Current account uses (the main lane)
The permitted current-account purposes are the common ones most families actually use:
Studies abroad / tuition fees for a child or self enrolled in a foreign university or school. One of the most common LRS uses and the one with the clearest TCS treatment when funded by an education loan.
Medical treatment abroad for self or a family member, including the escort expenses of the accompanying attendant. Supporting documentation (physician letter, hospital estimate) is standard.
Family maintenance / gifts to a close relative abroad. Includes regular monthly support to a parent, child, or sibling resident outside India.
Travel for private purposes including loading a forex card, buying foreign currency before departure, or paying for a trip in advance.
Donations to foreign nonprofits that meet FEMA eligibility criteria.
Business visits classified as private travel, up to the applicable limit, with reimbursement rules depending on employer sponsorship.
Capital account uses
LRS also permits certain capital-account uses: investment in foreign stocks, ETFs, mutual funds, and real estate purchase abroad. These are permitted under the scheme but carry different tax treatment (TCS at a higher rate for most capital-account flows after a threshold) and are not part of the common education or family-maintenance path. The current blog is focused on current-account LRS flows.
What LRS does not cover
LRS does not cover business-to-business trade payments (those fall under the separate business remittance framework). It does not cover certain prohibited uses such as margin trading, lottery, or purchase of certain prohibited sectors defined by RBI. It does not permit remittance for the purpose of making an unsecured loan to a non-resident. Verify the full prohibited-use list with the current RBI notification before planning a non-standard LRS send.
Fee components under LRS
The all-in cost of an LRS transfer is a stack of five layers. Three are provider-driven and comparable across authorized dealers. Two are set by the Indian government or regulation and apply regardless of which dealer you use.
Provider-driven layers
FX markup. The spread above the mid-market (Google / Reuters) rate at which the authorized dealer sells foreign currency to the sender. Traditional Indian bank branches typically embed 1.5 to 3 percent here, often more at the airport counter. Transparent transfer apps publish mid-market FX with zero or near-zero markup. On a US$ 50,000 tuition payment at a 2 percent FX markup, this layer alone is US$ 1,000.
Transfer fee / commission. Charged by the authorized dealer per transaction. Bank branches typically charge a flat fee (sometimes paired with a percentage) that lands between INR 500 and INR 1,500 per outbound remittance. Transparent apps typically charge 0.3 to 0.5 percent of the amount with no fixed-fee floor.
SWIFT / correspondent bank fees. If the transfer routes via SWIFT (which most bank-channel LRS flows do), one or more intermediary banks between the Indian bank and the foreign recipient bank can deduct US$ 15 to US$ 25 per hop. These deductions reduce the amount the recipient receives, often leaving the sender wondering where the shortfall came from. Apps that use direct bank partnerships on the destination side (ACH into a US bank account, for instance) usually avoid these entirely.
Regulatory layers
GST on fees. Goods and Services Tax at 18 percent is charged on the fee portion of the LRS transaction (both the per-transfer fee and the FX margin, in some bank formulations). Set by GST law, not by the provider.
TCS (Tax Collected at Source). Collected at the time of remittance by the authorized dealer and later adjustable against the sender’s annual income tax liability. The applicable TCS rate depends on the purpose code and the funding source: education remittances funded by an education loan from an approved Indian lender carry a lower rate; most other LRS uses carry a higher rate once the annual cumulative amount crosses a specified threshold. The exact rates and thresholds are revised each Union Budget, so verify the current year’s figures with a CA or the Income Tax portal before a large remittance.
What this looks like in practice
A US$ 50,000 tuition payment via a traditional bank branch LRS flow might carry: US$ 1,000 FX markup (2%) + INR 1,000 per-transfer fee (about US$ 12) + US$ 20 SWIFT intermediary + 18% GST on fees (about US$ 180 on an aggregate fee base) + the applicable TCS collected at remittance. The transfer fee line on the receipt reads a few hundred rupees; the all-in cost is closer to US$ 1,200 plus TCS. On a semester tuition payment, this is meaningful. On a four-year degree program, it is enough to pay a semester’s worth of books.
Bank vs app: how the two shapes compare on an LRS flow
The authorized dealer landscape for LRS splits into three shapes:
Traditional bank branch. The default for most residents, especially for larger transfers like tuition. Paperwork is form-heavy (Form A2 with supporting documents), the FX rate is usually a bank-set rate above mid-market, and processing can take one to three business days. Reliable, well-documented, and expensive.
Online banking LRS portal. Most major Indian banks now offer LRS remittance through their online portals. The paperwork is uploaded digitally rather than carried to a branch, which saves time, but the FX rate is usually the same bank-set rate as the branch channel. Faster to initiate, same all-in cost.
Dedicated remittance apps and fintechs. A newer category that uses transparent mid-market FX, a flat percentage fee, and digital-first KYC and compliance workflows. The best of these settle within hours instead of days and publish the full fee breakdown upfront. The constraint is coverage: not every destination corridor is supported by every app, so verify the destination country is covered before switching.
For most permitted LRS flows (tuition, medical, family maintenance, travel), a transparent remittance app will land five to ten times cheaper than a traditional bank LRS channel on an identical transfer, driven mostly by the FX markup difference and secondarily by the per-transfer fee. The gap tightens on very large transfers where the fixed-fee component becomes proportionally small, but even at a US$ 100,000 send, the FX markup line alone usually keeps the bank channel 1 to 2 percent more expensive.
Travel Tip: What the real all-in cost of a US$ 50,000 LRS tuition payment looks like
| Channel | FX Markup | Transfer Fee | SWIFT / Intermediary | GST on fees | All-in before TCS |
|---|---|---|---|---|---|
| Traditional bank branch (2% FX, INR 1,000 fee) | ~US$ 1,000 | ~US$ 12 | US$ 20 | ~US$ 180 | ~US$ 1,212 |
| Transparent remittance app (0% FX, 0.4% fee) | US$ 0 | US$ 200 | US$ 0 | ~US$ 36 | ~US$ 236 |
TCS applies on both and is adjustable against the sender’s income tax liability. The gap in the all-in before TCS, on this single transfer, is close to a thousand US dollars, going straight to the authorized dealer rather than to the recipient university.
Reporting obligations: what the sender has to do
Every LRS remittance carries documentation and reporting responsibilities. Most of them are routine but worth knowing about before the first send.
At the time of remittance
Form A2 is the standard remittance declaration under FEMA. The sender signs it (digitally in the app or online channel; physically at a branch), attesting the purpose, the amount, and that the aggregate LRS usage for the year is within the US$ 250,000 limit.
Purpose code. The sender selects the correct code from the list the authorized dealer presents. Common codes for current-account uses include tuition fees (S0305 under the standard classification), medical treatment, family maintenance, and travel. Picking the right code matters for FEMA compliance and for later tax or audit review. Sliq Pay makes the full list visible and easy to work through, but the customer picks.
Supporting documents. For most routine purposes, no additional documentation is required beyond the Form A2 and the KYC on file. For medical and tuition flows above a certain threshold, the dealer may ask for the hospital estimate or the university invoice.
At the end of the financial year
Income tax return. The TCS collected at remittance is captured on the sender’s Form 26AS and claimable against total tax liability when filing the annual return. Keep the TCS certificates from every LRS remittance.
Aggregate LRS declaration. Senders whose cumulative LRS use crosses certain thresholds may need to make specific disclosures on the income tax return.
FEMA record retention. The authorized dealer is required to retain the Form A2 and supporting documents for a defined period. The sender should also keep their own copy of each confirmation, with the exact INR / USD numbers and the purpose code, in case of a later tax or audit query. Most audits that touch LRS flows ask for this trail, and reconstructing it after the fact is painful.
Where Sliq Pay fits for LRS remittances
Sliq Pay is building a dedicated India-to-US LRS remittance product for the current-account purposes this guide covers: tuition fees, medical treatment abroad, family maintenance, travel, and donations. The product is being built around mid-market (Google / Reuters) FX with zero markup, a transparent per-transfer fee of 0.3 to 0.5 percent of the amount, a fully digital KYC flow, and TCS handling calculated and collected on-flow so the sender does not need to make a separate banking trip. Investment in foreign stocks, ETFs, and other capital-account LRS uses is a separate conversation and is not part of the current-account path being built.
For a resident Indian planning a non-trivial tuition, medical, or family-support flow abroad, the shape of a transparent app pricing structure removes most of the FX markup layer, which is where traditional bank LRS flows accumulate the bulk of their all-in cost.
FAQs: International transfer fees under LRS
What is the annual LRS limit per individual? US$ 250,000 per individual per financial year, under the current RBI notification. The limit is per person, so a two-parent household can send up to US$ 500,000 by using both parents’ individual allowances. The limit is for aggregate remittances across all permitted purposes combined.
Does TCS apply on all LRS remittances? Yes, TCS applies on LRS remittances, with the rate depending on the purpose code and the funding source. Education remittances funded by an education loan from an approved lender carry a lower rate; other LRS uses carry a higher rate once annual cumulative amounts cross a specified threshold. TCS is collected at the time of remittance and is adjustable against the sender’s annual income tax liability. Rates change each Union Budget; verify the current year’s figures before a large transfer.
Can I use LRS to invest in foreign stocks or ETFs? Yes, investment in foreign equities and funds is permitted under LRS, but it is a capital-account use with different tax treatment from current-account uses like tuition or family maintenance. Sliq Pay’s LRS product being built is focused on current-account flows and does not cover foreign investment transfers.
What is the right purpose code for a tuition remittance under LRS? Tuition fees for study abroad fall under the “studies abroad / tuition fees” purpose code category defined by RBI. The exact code is chosen by the customer at the time of remittance from a list the authorized dealer presents. Sliq Pay makes the list visible and easy to work through, but the customer picks the code themselves.
Why do bank LRS transfers cost so much more than app-based ones? Mostly the FX markup. Traditional bank LRS flows embed a 1.5 to 3 percent spread above the mid-market rate when converting rupees to foreign currency; transparent remittance apps publish mid-market FX with zero or near-zero markup. On a US$ 50,000 transfer, this difference alone is US$ 750 to US$ 1,500. Secondary factors are per-transfer fees and SWIFT intermediary deductions, which also favor the app channel.
What documents do I need for an LRS remittance? At minimum: completed Form A2, KYC on file with the authorized dealer, and selected purpose code. For medical and tuition flows above certain thresholds, supporting documents (hospital estimate, university invoice) may be requested. Keep your own copy of every confirmation screen with the exact INR / USD numbers and the purpose code.
How is TCS claimed back at year-end? The TCS collected at the time of remittance is captured on the sender’s Form 26AS and claimable against total tax liability when filing the annual income tax return. If the sender’s final tax liability is lower than the aggregate TCS collected, the balance is refundable. Keep the TCS certificates from every LRS remittance for the return filing.
What happens if I exceed the US$ 250,000 annual LRS limit? Remittances beyond the per-individual US$ 250,000 cap require specific RBI approval and are not routinely granted for standard current-account purposes. For most families, planning the total annual send pattern across both parents’ individual LRS allowances is the practical workaround for larger needs.
The short version
LRS defines who can remit how much from India for what purpose, and the fee stack on every outbound rupee is the sum of five layers. Three are provider-driven (FX markup, per-transfer fee, SWIFT intermediary) and comparable across authorized dealers. Two are regulatory (GST on fees, TCS at the purpose-dependent rate). On a US$ 50,000 tuition transfer, a traditional bank LRS flow typically runs US$ 1,200+ in all-in friction before TCS; a transparent remittance app on the same transfer typically runs under US$ 250. The gap is almost entirely FX markup. Pick the channel on the FX line, keep the paper trail, and understand which costs are regulatory versus negotiable before the first send.
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.
