LRS and TCS for GIFT City Funds: Limits, 20% TCS and a Calculator
By Anup Vatyani, AMFI-registered Mutual Fund Distributor (ARN 106715)
Updated
The short answer. A resident Indian invests in a GIFT City fund by sending money under the Liberalised Remittance Scheme (LRS), because for foreign exchange purposes GIFT IFSC is treated as outside India. That brings two rules: an annual limit of USD 250,000, and Tax Collected at Source (TCS) of 20% on the part of your year's remittances above ₹10 lakh. TCS is not a cost; you claim it back in your income tax return.
TCS calculator for a GIFT City investment
For resident Indians, FY 2026-27. It runs in your browser; nothing you type is sent or stored.
TCS your bank collects
₹3,00,000
Total debited from your account
₹28,00,000
LRS used this year, approx.
USD 28,409 of 250,000
20% on the part of your year's LRS remittances above ₹10 lakh. TCS is tax paid in advance: it appears against your PAN and is claimed in your income tax return. A higher rate applies without PAN/Aadhaar. Confirm with your bank or CA.
How much TCS on a GIFT City investment?
TCS on a GIFT City investment, if it is your only LRS remittance this year
- Invest ₹5 lakh₹0
- Invest ₹10 lakh₹0
- Invest ₹15 lakh₹1,00,000
- Invest ₹25 lakh₹3,00,000
- Invest ₹50 lakh₹8,00,000
From your bank to the fund, and back to you
- 1
Form A2 at your bank
Purpose: overseas portfolio investment
- 2
Bank checks your LRS total
Across the financial year
- 3
USD sent to the fund
TCS deducted above ₹10 lakh
- 4
TCS shows in Form 26AS
Against your PAN
- 5
Claim it in your ITR
Set off or refunded
The ₹10 lakh threshold counts everything
The threshold is per person per financial year and adds up all your LRS remittances, not just investments. School fees sent abroad in June count towards it, so a GIFT City investment in November may cross the threshold sooner than you expect. Tell your bank about remittances made through other banks.
Getting the TCS back
- Check that the TCS appears in Form 26AS or the Annual Information Statement.
- Claim it in your income tax return; any excess over your tax is refunded.
- Salaried? Ask your employer to take it into account when deducting TDS, so less cash is tied up.
Why NRIs are different
NRIs investing money already held abroad send it directly in foreign currency. LRS and TCS apply to residents sending money out of India, so they do not arise. See UAE NRIs or check your route.
Planning monthly investments?
Each instalment is a separate LRS remittance; see SIP in GIFT City funds for a month-by-month example.
Official sources: RBI FAQs on LRS · Income Tax Department
LRS limit vs TCS threshold: not the same thing
| LRS limit | TCS threshold | |
|---|---|---|
| Set by | RBI (foreign exchange) | Income-tax law |
| Amount | USD 250,000 per person per financial year | ₹10 lakh per person per financial year |
| What happens above it | You cannot remit more that year | 20% TCS on investment remittances, credited back |
| Counts | All LRS purposes together | All LRS remittances together |
Example: a couple investing together
Meera and Arjun, both resident, want to put ₹20 lakh into a GIFT City fund this year and have sent nothing abroad so far. If Meera sends it all, ₹10 lakh is above her threshold and ₹2 lakh is collected as TCS. If each sends ₹10 lakh of their own money, neither crosses the threshold and no TCS is collected. Either way the tax is the same in the end; the difference is cash tied up until the returns are processed. Each person must use genuinely their own funds.
This article is educational and is not tax advice. Rates are as changed by the Finance Act, 2026 (effective 1 April 2026) and can change; confirm with your bank or chartered accountant before remitting.