On 15 October 2026, SBI Research urged the government and the Reserve Bank of India to consider curbs on non-essential remittances under the Liberalised Remittance Scheme, according to a Business Standard report on the SBI Research note. The recommendation is not policy, and the RBI has announced no change. It does, however, put a spotlight on a practice advisors see every week, which is spreading one family's overseas money across several members to manage TCS on LRS.
The logic is sound as far as it goes. Each resident individual has a separate USD 250,000 limit under the scheme and a separate ₹10 lakh threshold before TCS applies, as the guide to TCS on foreign remittance explains. That holds up only when each family member sends money that is truly theirs, into an investment held in their own name. Where that is not the case, the RBI's pooling rules, the clubbing provisions of the Income-tax Act, 2025 and the gift rules all come into play, and a plan meant to ease cash flow can turn into a tax and paperwork problem.
How TCS on LRS is counted for each family member
Under Section 394 of the Income-tax Act, 2025, the bank collects TCS once a client's remittances under the scheme in a tax year exceed ₹10 lakh. For education and medical treatment the rate above the threshold is 2 per cent, cut from 5 per cent from 1 April 2026. Remittances for other purposes, including investment and gifts, attract 20 per cent on the amount above ₹10 lakh. The threshold follows the person rather than the bank, and UCO Bank's TCS guidance states that the LRS limit applies to the remitter, independent of the remitting institution.
Because the threshold is personal, a family's TCS depends on who sends the money. For example, a family that wants to invest ₹60 lakh abroad in tax year 2026-27 would see TCS of ₹10 lakh if one parent sends it all, which is 20 per cent of the ₹50 lakh above the threshold. If two parents and an adult daughter each remit ₹20 lakh from their own savings, each pays 20 per cent on ₹10 lakh, or ₹6 lakh across the three. The family's final tax is the same either way, because TCS is a credit against each person's own tax, but ₹4 lakh less sits with the tax department until the returns are filed.
Where the RBI draws the line on pooling
The RBI lets families use the scheme together, but within limits. Its LRS FAQs say remittances can be consolidated in respect of family members, provided each member complies with the scheme's terms. For capital account transactions, which include opening an account abroad or making an investment, other family members cannot club their limits unless they are co-owners or co-partners of that account or investment. In practice, a father cannot use his wife's and son's limits to fund an investment held only in his name.
The same FAQs list a prohibited move that families sometimes attempt. A resident may not gift foreign currency to another resident for credit to that person's foreign currency account held abroad under the scheme. Every remitter must give the bank their own PAN, and the declaration for a minor's remittance must be countersigned by the minor's natural guardian. These rules mean the family has to settle who owns what before the first transfer, because unwinding it once the money is abroad is far harder.
When gifted money brings clubbing into play
The more common risk sits in Indian tax law. Often one spouse earns most of the income and transfers money to the other so that both can remit. Under Section 99 of the Income-tax Act, 2025, income from an asset transferred to a spouse without adequate consideration is included in the income of the person who transferred it, according to the Income Tax Department's FAQs on clubbing of income. The same rule covers a transfer to a son's wife, and a minor child's income is clubbed with the parent whose income is higher.
That creates a mismatch. The TCS is collected against the PAN of the spouse who remits, and it appears in that spouse's annual tax statement, Form 168, which the Income Tax Department lists as the successor to Form 26AS. Yet the income from the investment may be taxed in the other spouse's hands. A remitter with little income of their own can then hold more TCS credit than tax to set it against, and has to wait for a refund after filing.
Gifts to adult children work differently. The clubbing rules in the department's FAQs cover a spouse, a son's wife and minor children, so money given to an adult child is generally treated as the child's own. Money received from a relative, as the law defines the term, is also not taxed in the receiver's hands, while gifts from non-relatives above ₹50,000 in a year are. The adult child then owns the money and the investment outright, which is a real transfer of family wealth, and the parents should be comfortable with that before it happens.
Gifts sent abroad and why they are being watched
Families also use the scheme to support relatives overseas. The RBI's FAQs allow a resident to make a rupee gift to a close relative who is an NRI or PIO, and such gifts count toward the USD 250,000 limit. Bank TCS tables, including UCO Bank's, list gifts with shares, bonds and real estate among the purposes taxed at 20 per cent above the threshold.
This is also where the SBI Research figures point. Gift remittances came to about USD 1.2 billion between March and July, against USD 2.6 billion in the whole of 2025-26, according to the report. Its authors want non-essential outflows examined to support the rupee, and gifts sit alongside travel in their analysis. Whether any curb follows is unknown, and SBI Research is a bank's economics team, not a regulator. Even so, by singling out gifts, the report puts family transfers inside the debate about which outflows count as essential.
What advisors should check before the family remits
Before any family member remits for investment this tax year, advisors can work through four checks. They work best in order, because each depends on the answer to the one before.
- Confirm whose money it is. Each remitter should be able to show the funds came from their own income, savings or a documented gift, and that the investment abroad will be held in their name.
- Ask the client's CA who will be taxed on the income. Where money moved between spouses, to a son's wife or into a minor's name, clubbing should be settled before the transfer rather than at return time.
- Run the TCS arithmetic for each PAN, including tuition, travel and earlier transfers already made this tax year, using the TCS rate chart for 2026-27.
- Keep a file of the LRS declarations, bank advices and gift letters for every family member, because these are what a bank or the tax department will ask to see.
The investment itself carries its own risks, whichever family member holds it. A private investment of the kind described in the guide to US commercial real estate for advisors can lose capital, is usually illiquid for several years and may not pay distributions. It is also exposed to falling property values, tenants leaving, leverage and movements in the rupee against the dollar. Spreading the money across the family does nothing to change those risks, and putting several members into the same deal adds concentration.
Advisors who introduce eligible clients through Raveum's partner page will find the same discipline applies there. Raveum handles KYC, agreements and US tax forms investor by investor, while each client's Indian tax position stays with the client and their CA. A family investing together therefore needs a clean record for each member.
SBI's call may never become policy, but it is a reminder that the scheme was written for individuals rather than households. A family that spreads its remittances with real ownership, clear records and a settled view of who is taxed on what is in a strong position whatever the RBI decides. A family that spreads them only to reduce the TCS collected at the bank is relying on the part of the plan most likely to draw questions. The guide to TCS on foreign remittance sets out the threshold, refund and timing rules that sit underneath every family plan.
Frequently asked questions
Is the ₹10 lakh TCS threshold per person or per family?
The threshold is per person. Each resident individual who remits under the Liberalised Remittance Scheme has a separate ₹10 lakh threshold in each tax year, counted across all banks and all purposes. A family therefore has as many thresholds as remitting members, provided each person sends money that is genuinely their own.
Can family members combine their LRS limits for one investment abroad?
Generally not. The RBI allows remittances to be consolidated for family members, but for capital account transactions such as investments, other members cannot club their limits unless they are co-owners or co-partners of that investment. Each member must also meet the scheme's terms and give the bank their own PAN.
Can a parent gift money to an adult child to remit under the child's LRS limit?
Yes. A resident parent can give rupees to an adult child in India, and the child can then remit under their own limit. Gifts from a relative are not taxed in the receiver's hands. The child then owns the money and the investment outright, so the family should treat it as a real gift.
What happens to TCS when one spouse funds the other's remittance?
The TCS is collected against the PAN of the spouse who remits and appears in that spouse's Form 168. Under the clubbing rules, income from the investment may be taxed in the hands of the spouse who provided the money. The remitting spouse can then hold surplus TCS credit and has to claim a refund.
Is TCS charged on gifts sent to relatives abroad?
Yes. Gifts are a permitted purpose under the Liberalised Remittance Scheme and count toward the USD 250,000 limit. Bank TCS tables, such as UCO Bank's, list gifts among the purposes taxed at 20 per cent above the remitter's ₹10 lakh threshold in a tax year. The remitter claims the TCS as a credit in their return.
Does spreading a remittance across the family reduce investment risk?
No. Spreading changes how much TCS the bank collects and who reports the investment, but it leaves the investment's risks unchanged. Capital can still be lost, money can be locked in for years, distributions may stop and currency movements affect value. Putting several family members into the same deal also adds concentration.
This article is for general education and is not tax, legal or investment advice. Rules change and depend on individual circumstances. All investing involves risk, including loss of capital, illiquidity and currency movements. Offerings on Raveum are available to eligible investors only and are not open to the general public.
