LRS after returning to India: sending money to your US accounts, the ₹25 lakh limit, and 20% TCS

Returning to India doesn't mean severing your financial ties with the US. Indian residents can remit money abroad under the Liberalised Remittance Scheme (LRS) — for investments, maintaining existing accounts, children's overseas education, or travel. Understanding the rules prevents accidental FEMA violations and avoids unnecessary TCS pain.

What LRS allows for returning NRIs

The LRS is an RBI framework that allows resident individuals to remit up to USD 250,000 per financial year for permitted purposes. As a returning NRI who is now resident:

Permitted LRS purposes:

• Investment in overseas assets (US stocks, ETFs via existing US brokerage)
• Maintenance of close relatives abroad (parents, children still in the US)
• Education for self or children overseas
• Travel
• Medical treatment abroad
• Purchase of immovable property abroad (if you comply with FEMA)
• Gifts to relatives

Not permitted under LRS:

• Remittances to countries on FATF non-compliant or high-risk lists
• Margin trading in derivatives directly
• Sending money to entities the remitter owns/controls (structured round-tripping)

The ₹25 lakh practical cap

Theoretical limit: USD 250,000 (~₹21 crore) per person per financial year.

Operational reality: since the 20% TCS rule came into effect, banks have tightened their LRS processes. Most bank branches process LRS without friction up to ₹25 lakh/year (in aggregate). Above ₹25 lakh, you'll encounter:

• Enhanced documentation requirements
• Internal compliance review
• Possible relationship manager involvement

For most returning NRIs maintaining US investment accounts, ₹25 lakh/year is enough — it's approximately $30,000 of fresh investment annually in your US brokerage.

The 20% TCS explained

Since October 1, 2023, LRS remittances above ₹7 lakh in a financial year attract 20% TCS.

How it works:

• First ₹7 lakh remitted in a financial year: no TCS
• Amount above ₹7 lakh: 20% TCS deducted by your bank before the wire goes out
• The net amount actually remitted is 80% of the amount above ₹7 lakh

Example:

• You want to send ₹15 lakh to your Schwab account
• First ₹7 lakh: no TCS → ₹7 lakh goes to Schwab
• Next ₹8 lakh: 20% TCS = ₹1.6 lakh → only ₹6.4 lakh goes to Schwab
• Schwab receives: ₹13.4 lakh
• ₹1.6 lakh held by government until you file ITR

Claiming the TCS refund:

1. TCS appears in your AIS (Annual Information Statement) on incometax.gov.in
2. File ITR — include the TCS as a credit in "Tax Credits" / "Taxes Paid" schedule
3. The TCS amount reduces your tax liability; if it exceeds your tax, you get a refund
4. Refund timeline: 6–12 months depending on ITR processing queue

Practical implication: TCS is a cash-flow issue, not a tax issue. You tie up capital for 6–12 months interest-free with the government. For large amounts, the opportunity cost is real. Front-load remittances early in the financial year (April–June) to minimise the wait for refund.

Exception: education loans If the LRS remittance is for education through a bank-financed education loan, TCS is only 0.5% (not 20%) above ₹7 lakh. If your children are studying abroad, use an education loan to minimise TCS.

Maintaining your US brokerage from India

After returning, you can continue holding and trading in your existing US brokerage accounts (Schwab, Fidelity, IBKR, etc.):

IBKR (Interactive Brokers): fully operational for Indian residents. You declare yourself as a resident of India on your account. Trading, transfers, and withdrawals continue. FATCA W-8BEN form on file.

Schwab and Fidelity: may restrict some services for non-US residents. Call their international desk to confirm your account status. Schwab's International Account is specifically designed for non-US residents. Some Schwab/Fidelity taxable accounts may require conversion to an international account type.

Tax implications of ongoing US brokerage activity:

• Dividends and interest: subject to US withholding (typically 15% under India-US DTAA); credited against Indian tax via Form 67
• Capital gains: not subject to US withholding for non-US persons (Indian residents pay only in India)
• Report in ITR: Schedule FSI (income from outside India) + Schedule FA (foreign asset disclosure) + Form 67 (for DTAA credits)

Sending money back to the US for existing accounts

To add fresh funds to your US brokerage from India:

Step 1: Initiate LRS remittance at your Indian bank (HDFC, ICICI, SBI)

• Online LRS portals available at HDFC (Forex Portal), ICICI (Money to World), Axis (Travel Currency Cards & Wire Transfers)
• Provide purpose code (capital account transaction — investment in foreign securities: S0014 or applicable RBI purpose code)
• Provide your US brokerage account details (account number, ABA routing, bank address)

Step 2: Bank processes TCS calculation and deducts if applicable

Step 3: SWIFT wire arrives at US brokerage in 2–5 business days

Step 4: Track TCS in AIS; claim in annual ITR

LRS aggregation: family remittances

LRS limit is per individual. A married couple can each remit ₹25 lakh/year individually = ₹50 lakh combined. Minor children: parents can remit on behalf of minors, aggregated with parental remittances under the minors' separate limits.

Important: banks aggregate all LRS transactions across their own branch network. If you remit from multiple banks, each bank's system is separate — but FEMA technically requires you to self-certify that aggregate LRS doesn't exceed your limit. Exceeding USD 250,000 is a FEMA violation, not just a bank policy issue.

LRS vs repatriation of US funds already in India

If you brought US money to India via an RFC or NRE account, that money is freely repatriable — you can send it back to the US without using LRS (it's return of capital, not a new remittance). LRS applies only to fresh outward remittances from your resident savings account. Funds already repatriated to India once don't "re-enter" the LRS limit if you send them back.

Related: RFC account for returning NRIs · US brokerage account for Indian residents · Schedule FA: foreign asset disclosure