Sending Money Out of India as an NRI: Why the LRS Is Not Yours and the NRO Route Lets Out Four Times More

You are an NRI in Dubai with Rs 90 lakh sitting in your NRO account in Mumbai. A resident colleague mentions over lunch that he just wired USD 250,000 to his son in the US "under the LRS," grumbling about the 20% tax the bank collected on top. You go home, search for the LRS form, and cannot get a straight answer to three questions: does the scheme apply to you, are you capped at USD 250,000 or USD 1 million, and will that 20% hit your transfer too. The confusion is not your fault. The two routes look alike from the outside, and most of the internet treats them as one. They are not. They are two doors keyed to two opposite residency states, and only one of them opens for you.

The 30-second answer: NRIs do not use the Liberalised Remittance Scheme. The LRS, capped at USD 250,000 per financial year, is for resident individuals under FEMA only, and it is the LRS that carries TCS (20% on most purposes above Rs 10 lakh). As an NRI you are a non-resident under FEMA, so you send money out through the NRO repatriation route: up to USD 1 million per financial year, net of taxes, from your NRO account, plus freely repatriable NRE and FCNR balances with no limit. Your compliance is TDS on the income plus Form 15CA and 15CB (renamed Form 145 and 146 from April 1, 2026), not TCS. When you return to India and your FEMA status flips, the doors swap and the LRS becomes yours.

This guide assumes you already know roughly what NRE, NRO and FCNR accounts hold; if not, start with NRE, NRO and FCNR accounts compared. What follows is the part that actually moves money: why the LRS is structurally closed to you, why your real ceiling is far above a million dollars, the exact TCS the law saves you from, the Form 145/146 mechanics that replaced 15CA/15CB this year, and the one timing trap that turns a returning NRI's USD 1 million door into a USD 250,000 one overnight.

The number you keep reading is not your number

Here is the single correction that fixes ninety percent of the confusion: the USD 250,000 LRS limit does not cap NRIs, because NRIs cannot use the LRS at all. It is not a smaller version of your allowance. It belongs to a different person.

Which route you may use is not a preference you select at the bank counter. It is fixed by your residency status under the Foreign Exchange Management Act. The LRS is the channel for resident individuals, introduced by the RBI in 2004, letting a resident remit up to USD 250,000 a year for almost any permitted purpose, gifts, education, travel, medical care, foreign shares and property, without per-transaction RBI approval. The NRO repatriation route is the channel for non-residents, NRIs and OCIs, letting you take up to USD 1 million a year, net of Indian tax, out of your NRO account, on top of unlimited withdrawal from NRE and FCNR.

Notice the asymmetry, because it is the whole point. A resident gets a lower headline figure but can move money for nearly any reason. An NRI gets a far higher figure but only out of specific account types holding money that has already passed through, or sits outside, the Indian tax net. The two schemes were drawn for two different people moving two different kinds of money, and on any given day an individual is exactly one of those people. An NRI looking for "the LRS form" comes up empty for the same reason a resident cannot open an NRE account: the schemes are built around opposite residency states, and there is no overlap to exploit or fall into.

Under FEMA, residency turns on where you live and what you intend, not on your passport. Once you take up employment, business or settled life abroad with the intention to stay, you become a person resident outside India from the day you leave, and the LRS stops being available to you that same day. This matters because it is the cleanest line in Indian cross-border finance and people still cross it: you are non-resident under FEMA, therefore the LRS is shut, therefore the USD 250,000 cap and its TCS are simply not facts about your life.

One subtlety worth flagging before it bites you. FEMA residency and income-tax residency are separate tests under separate laws. In a transition year you can be a resident under the Income Tax Act, because you crossed the day-count threshold, while still being a non-resident under FEMA for part of the year, or the reverse. The route you may use, LRS versus NRO, is decided by your FEMA status alone. Your income-tax status decides how the money is taxed, not which door it leaves through. We return to this in the returning-NRI section, because that is precisely where it costs people money. For the day-count mechanics, see NRI residency and RNOR rules.

Your real ceiling is not a million dollars, it is a million plus everything in NRE and FCNR

The USD 1 million figure gets quoted as if it were the NRI's hard limit. It is the limit on one account type only, and treating it as your total understates your headroom by an order of magnitude.

The cap applies to NRO because NRO holds India-sourced, potentially taxable income: rent, dividends, NRO interest, gifts, inheritance, sale proceeds. You can repatriate up to USD 1,000,000 per financial year (April 1 to March 31) from NRO, net of taxes, with no RBI approval below that line. Above it, you need prior RBI approval, decided case by case, typically running 60 to 90 days. The limit is pooled per person across every source, not granted per property or per transaction, so three flats and a fixed deposit all draw down the same single bucket. And it does not carry forward; an unused balance resets each April rather than rolling over.

What sits on top of that is the part with no LRS equivalent at all: NRE and FCNR balances are fully and freely repatriable, no limit, no certificate, no form. NRE holds money you earned abroad and remitted in; FCNR holds foreign currency held outright as a deposit. Both have already cleared tax abroad, India does not tax their interest, and so India lets them out without restriction. Only NRO, holding India-sourced income, is gated.

So the honest statement of an NRI's ceiling is USD 1 million from NRO plus unlimited NRE and FCNR. An NRI who keeps foreign earnings in NRE and FCNR and routes only India-sourced income through NRO has enormous repatriation room, far beyond a resident's USD 250,000. The discipline this rewards is structural: keep your money in the right account in the first place, and the cap rarely binds. The step-by-step NRO process, with documents and timelines, lives in the NRO repatriation process; the no-limit logic of foreign-currency deposits is in FCNR deposits explained.

The 20% you keep hearing about is a resident's tax, and you never pay it

Tax Collected at Source on outward remittance is the rule most often misattributed to NRIs, so be precise: TCS on remittance is a resident-LRS tax, and it does not apply to you.

For residents, it sits in Section 206C(1G) of the Income Tax Act (carried into Section 506 of the Income Tax Act, 2025). When a resident remits under the LRS, the bank or forex provider collects tax at the moment of transfer. Until FY2024-25 the threshold above which TCS bit was Rs 7 lakh; the Union Budget 2025 raised it to Rs 10 lakh per financial year from April 1, 2025, so a resident's first Rs 10 lakh of LRS remittances now attract nothing, and only the excess is exposed.

Above that threshold the rate turns on the purpose, and the rates were cut this year.

LRS purpose (resident)	TCS above Rs 10 lakh, from April 1, 2026
Education funded by a loan from a notified institution	Nil
Education (self-funded) or medical treatment	2%
Overseas tour package	2% (from the first rupee, no threshold)
All other purposes (gifts, investment, maintenance abroad)	20%

The timing matters because outdated tables still circulate. Through FY2025-26 the self-funded education and medical rate was 5%, and overseas tour packages ran at 5% up to Rs 10 lakh and 20% above. The Union Budget 2026 cut education, medical and tour-package remittances to a flat 2% from April 1, 2026, while leaving the 20% rate on "other purposes" above Rs 10 lakh untouched. This guide is published in April 2026, so the table reflects the post-April-2026 position.

The one mercy for residents who do pay it: TCS is not a final tax. It shows up in Form 26AS, the remitter claims it as a credit on filing, and it reduces tax payable or comes back as a refund. It is a cash-flow cost, not a permanent one. But cash flow is real money. A resident wiring Rs 50 lakh abroad for an investment funds Rs 8 lakh of TCS on the Rs 40 lakh above the threshold, locked up until the return is processed many months later.

None of this is your concern as an NRI. You make no LRS remittance, so there is no TCS to collect, refund or adjust on your repatriations. The tax that genuinely attaches to your money is TDS on the India-sourced income in your NRO account, governed by entirely different sections, covered in tax on NRO interest and TDS for NRIs and refunds. Do not let a junior banker conflate the two and apply LRS TCS to an NRO transfer; it is a recognisable error, and it is worth pushing back on at the counter.

What replaced 15CA and 15CB this April, and the trap in the renaming

If TCS is the resident's outward-remittance wrinkle, the CA certificate is the NRI's. It is not a tax; it is the declaration-plus-certificate that tells the tax department your cross-border payment of India-sourced money is tax-clean before it leaves. Two parts: the CA certificate examines the income, confirms the correct treatment, confirms TDS or self-assessment tax has been deducted or paid, and certifies compliance with the Income Tax Act and FEMA; your own online declaration on the portal then draws on that certificate. The order is fixed, certificate first, declaration second, then the bank acts.

You need the full pairing, the CA certificate plus the declaration's detailed part, once your taxable remittances cross Rs 5,00,000 in aggregate for the financial year and you do not hold a special Assessing Officer order. Below that, or where the income is genuinely not taxable, lighter parts of the declaration suffice and the certificate may not be required. In practice almost any serious NRO repatriation clears Rs 5 lakh, so banks treat the CA certificate as standard and will not release funds without the acknowledgement.

Now the change you cannot afford to get wrong in 2026. Under the Income Tax Act, 2025, in force from April 1, 2026, these forms are renamed and relocated. Form 15CA becomes Form 145 and Form 15CB becomes Form 146, now sitting under Section 395 of the Income Tax Act, 2025 and Rule 220 of the Income Tax Rules, 2026. The architecture is unchanged: same declaration-plus-certificate, same Rs 5 lakh trigger for the certificate (now Part C of Form 145), same online portal. Only the labels and citations move. The trap is purely operational and date-driven: a remittance actually made on or before March 31, 2026 stays valid on the old 15CA/15CB, while a remittance made on or after April 1, 2026 must use Form 145 and 146. File the wrong vintage, or skip it, and you face a penalty of up to Rs 1,00,000 under Section 462 of the new Act, plus a bank that simply will not move your money. If your remittance straddles that date, the date of the actual transfer governs, not the date you engaged your CA.

So the honest contrast holds and sharpens: a resident sending money abroad manages TCS; an NRI repatriating manages TDS on the income and Form 145/146. Neither faces the other's mechanism. For treaty certification on the underlying income, which is what lets you stop TDS over-deducting at source, see DTAA mechanics, the TRC and Form 10F.

Where the timeline actually breaks, and how to run the transfer

Putting it together, the sequence depends entirely on which account holds the money, because two of the three are trivial and one is gated. If the money is in NRE or FCNR, you instruct the bank with the beneficiary details and it converts and sends. No USD 1 million cap, no Form 145/146, no TCS. That is the entire process.

NRO is where the work lives, and the work is almost never the bank. The variable that blows out the timeline is step one, settling the tax on the income, not the remittance itself. You confirm TDS was correctly deducted on the NRO interest, rent, dividends or capital gains, and pay any shortfall, for example self-assessment tax on a gain. If a DTAA rate beats the default non-resident TDS, you get it applied at source with a Tax Residency Certificate and Form 10F, or you reclaim the excess later. Only then do you engage a chartered accountant for the certificate (Form 146, where taxable remittances exceed Rs 5 lakh), which is usually issued online in one to three working days, file the declaration (Form 145) yourself the same day, and submit the package to the bank: Form A2 (the FEMA outward-remittance declaration), the Form 145 acknowledgement, the Form 146 certificate, a request letter with beneficiary details, proof of the source of funds (sale deed, broker statements, lease, gift deed or will as relevant), proof of taxes paid, and KYC. The bank checks your USD 1 million headroom for the year, converts, and remits by SWIFT, with a clean file landing abroad in roughly one to two weeks from the day the tax is settled. Settle the tax cleanly and the rest is mechanical; arrive with the income still untaxed and the whole thing stalls.

The same Rs 85 lakh, two people, two very different bills

Put rupee and dollar numbers on the difference. Priya is an NRI in London whose Mumbai NRO account holds Rs 85,00,000, made up of accumulated net rent of Rs 55,00,000 and NRO fixed-deposit interest of Rs 30,00,000. The bank already deducted TDS on the interest at the non-resident rate; on the Rs 30,00,000 of interest, TDS at an effective 31.2% took Rs 9,36,000 at source before crediting the rest. The Rs 85,00,000 in the account is therefore already net of that tax and available to repatriate. Because her taxable remittance comfortably exceeds Rs 5,00,000, she needs Form 146 plus Form 145 Part C. Converting at an assumed Rs 86.00 per USD, the Rs 85,00,000 is USD 98,837, well inside her USD 1,000,000 NRO limit, so no RBI approval is needed and roughly USD 901,000 of headroom remains for the year. Critically, Priya pays no TCS, because she is not on the LRS. Her only tax cost is the income tax on the interest, which she part-reclaims on her return under the India-UK DTAA.

Now hand the identical Rs 85,00,000 to Priya's brother Arun, a resident in Pune, who wants to gift it to his daughter abroad under the LRS. The amount itself, USD 98,837, sits under the USD 250,000 LRS ceiling, so it is permitted. But a gift is an "other purpose" remittance, so 20% TCS applies on everything above Rs 10 lakh. The exposed amount is Rs 85,00,000 minus Rs 10,00,000, or Rs 75,00,000, and 20% of that is Rs 15,00,000 collected at the counter. Arun has to fund Rs 1,00,00,000 at the bank, Rs 85 lakh to remit plus Rs 15 lakh TCS, to land Rs 85 lakh abroad. He will reclaim the Rs 15 lakh when he files, but it is gone until then. Same rupees, same destination, and the resident eats a Rs 15 lakh cash-flow hit that the NRI never sees. That gap is what "the LRS carries TCS and the NRO route does not" means in practice, and it is the clearest single argument that, for outward remittance, NRI status is the stronger position by a wide margin.

The returning NRI who waited a week too long

The most expensive mistake in this entire topic is not a wrong form. It is timing. Vikram has been an NRI in Toronto for nine years and is moving back to India permanently. He has Rs 1,40,00,000 in his NRO account, property-sale proceeds already net of capital-gains TDS, that he wants to send to his Canadian account before he resettles, plus a CAD-denominated FCNR deposit worth about USD 1,80,000.

While he is still a non-resident under FEMA, his options are wide. He can repatriate the Rs 1,40,00,000 from NRO under the USD 1 million route; at Rs 86.00 per USD that is USD 1,62,790, well inside the cap, needing Form 146 plus Form 145 Part C and no RBI approval, and no TCS. And he can repatriate the FCNR USD 1,80,000 freely, no limit and no forms. Two transfers, a CA certificate, a week or two of processing, and the money is in Canada clean.

Now suppose he does nothing until after he has landed in India and become a resident under FEMA. His position inverts. His NRO account must be redesignated to a resident account, and the USD 1 million NRO repatriation route closes with it. As a resident, any outward remittance is now under the LRS, capped at USD 250,000 per financial year and exposed to TCS above Rs 10 lakh. The Rs 1,40,00,000 equivalent (USD 1,62,790) still fits inside the USD 250,000 ceiling, so he can send it, but as a gift or maintenance remittance it now attracts 20% TCS on roughly Rs 1,30,00,000 above the threshold, about Rs 26,00,000 locked up until his next return is filed. Had he moved the same money one week earlier as an NRI, that Rs 26 lakh would never have left his hands. The FCNR money has a clean bridge regardless: foreign currency held as an NRI can move into a Resident Foreign Currency (RFC) account, which is freely repatriable and sits outside the LRS limit, so the USD 1,80,000 is not trapped, but he must route it through RFC rather than let it convert into ordinary rupee balances.

The lesson is concrete and worth more than any other in this guide: repatriate large NRO balances while you are still an NRI, before your FEMA status flips, and park genuine foreign currency in an RFC account. The conversion mechanics are in returning NRI account conversion and RFC account explained.

Edge cases

A handful of situations sit outside the clean LRS-versus-NRO split and trip people up.

Income-tax resident but FEMA non-resident. In the year you move, you can be a resident under the Income Tax Act (enough days in India) while still a non-resident under FEMA for part of the year. The route question is decided by FEMA status, so if you are still FEMA non-resident, you stay on the NRO route regardless of your income-tax status. Confirm both tests; they do not always flip on the same date, and assuming they do is how someone ends up filing the wrong scheme.

More than USD 1 million from NRO in one year. You cannot solve this by switching to the LRS, because the LRS is not open to you. The genuine options are to split the remittance across two financial years (before March 31 and again after April 1), use a spouse's separate USD 1 million limit, or apply to the RBI for prior approval, which runs 60 to 90 days.

A resident funding an NRI's foreign account. This runs the other way. A resident parent wiring money to an NRI child abroad is making an LRS transaction, so the USD 250,000 limit and the TCS sit on the parent, not the child. If you are advising family back home, that is their problem to plan around, not yours.

NRE-funded assets bypass NRO entirely. If shares or property were bought on a repatriable basis from NRE or FCNR money, the sale proceeds may never touch the NRO route or the USD 1 million cap at all. Check how the asset was originally funded before you assume the NRO ceiling applies; the answer can move money out of the gated bucket entirely. See repatriating investment proceeds.

Keep the FIRC for money you bring in. When you originally remit money into India, the Foreign Inward Remittance Certificate is the proof of foreign-currency source that later lets you repatriate cleanly. Losing it makes a future repatriation harder to evidence. See the FIRC.

The honest read

The honest read is that this entire topic is people walking up to the wrong door, and the fix is to internalise that you are a different person, under the law, from the resident colleague comparing notes with you. As an NRI you cannot use the LRS, you are not capped at USD 250,000, and you do not pay the outward-remittance TCS. Full stop. Your route is NRO repatriation, USD 1 million per financial year net of taxes, plus your freely repatriable NRE and FCNR balances with no ceiling, and your compliance is TDS on the income plus Form 145 and 146, the renamed 15CA and 15CB from April 1, 2026.

So here is the recommendation, not a menu. For the common case, an NRI with India-sourced income to bring out, do three things and ignore the rest: keep your NRO income tax-clean year by year, use the DTAA with a TRC and Form 10F to stop TDS over-deducting at source, and remember that the higher number is yours, a full million dollars from NRO plus everything in NRE and FCNR, moved with two online forms and a week or two of processing. Structure your accounts so foreign earnings live in NRE and FCNR and only India income flows through NRO, and the USD 1 million cap will almost never bind on you.

The exception who must act differently is the returning NRI. If you have a large NRO balance and a move on the horizon, the calendar is the whole game: repatriate while you are still a non-resident under FEMA, before the USD 1 million door closes and leaves you facing the USD 250,000 LRS ceiling and 20% TCS, and route real foreign currency through an RFC account rather than letting it become ordinary rupees. Vikram's week was worth Rs 26 lakh. Yours might be worth more. That is the one decision in this guide where waiting has a price tag, and it is the one to get right.

Related guides

• The NRO repatriation process, step by step
• NRO to NRE transfer
• Sending money to India
• NRE, NRO and FCNR accounts compared
• FCNR deposits explained
• The FIRC, foreign inward remittance certificate
• Returning NRI account conversion
• RFC account explained
• Repatriating investment proceeds
• TDS for NRIs and refunds
• Tax on NRO interest
• DTAA mechanics, the TRC and Form 10F
• NRI residency and RNOR rules
• ITR filing for NRIs, AY 2026-27
• The Banking guides hub

This guide is general information, not tax, legal or investment advice, and it reflects rules current as of April 2026 for FY2026-27 (AY2027-28). The LRS USD 250,000 limit and its TCS apply to residents only; the NRO USD 1 million limit and Form 15CA/15CB (renamed Form 145/146 from April 1, 2026) apply to NRO repatriation by NRIs. Limits, TCS and TDS rates, DTAA positions and the form framework change, and your own position depends on your FEMA and income-tax residency, the source of the funds and the relevant treaty. Confirm the current rules and engage a qualified chartered accountant before you repatriate, remit or file any form.