Can Indian F-1 Students Carry $100,000? Rules and Tax Implications

Key Takeaways

• LRS annual limit remains USD 250,000 per resident individual starting April 1, 2025.
• TCS threshold increased to ₹10 lakh; 5% TCS applies on education funds above ₹10 lakh if no loan.
• PAN card mandatory for all LRS transactions; RBI monitors all remittances centrally.

Recent changes to India’s Liberalized Remittance Scheme (LRS) and related tax rules have a direct impact on Indian F-1 students planning to study in the United States 🇺🇸. These updates affect how much money can be sent abroad, what declarations are needed, and the tax implications for both students and their families. Understanding these changes is essential for anyone preparing to fund their U.S. education, especially when large sums like $100,000 are involved.

Below is a clear summary of what has changed, who is affected, the effective dates, required actions, and what these changes mean for pending and future applications.

Summary of Key Changes (Effective April 1, 2025)

• LRS annual limit remains at USD 250,000 per resident individual per financial year.
• TCS (Tax Collected at Source) threshold increased from ₹7 lakh to ₹10 lakh per year.
• TCS rates revised:
  • 0% for education funded by a specified education loan.
  • 5% for education (not via loan) and medical treatment, on amounts above ₹10 lakh.
  • 20% for all other purposes (like travel or investment) on amounts above ₹10 lakh.
• PAN (Permanent Account Number) is now mandatory for all LRS transactions.
• Centralized monitoring of all LRS transactions by the Reserve Bank of India (RBI).

These changes are designed to make it easier for families to send money for education while tightening controls on large outflows for other purposes.

Who Is Affected?

• Indian F-1 students planning to study in the United States 🇺🇸 who need to receive funds from India.
• Parents or guardians sending money abroad for their child’s education.
• Authorized dealer banks and forex agents handling remittances.
• Tax professionals advising families on compliance with new rules.

NRIs (Non-Resident Indians) are not eligible for LRS. Only resident Indians, as defined under the Foreign Exchange Management Act (FEMA), can use this scheme.

Effective Dates

• All changes apply from April 1, 2025.
• These rules are in force for the financial year 2025–26 and until further notice from the Indian government or RBI.

Required Actions for Indian F-1 Students and Families

1. Planning the Remittance

• Check eligibility: Only resident Indians can use LRS. NRIs cannot.
• Choose the right purpose: Clearly state “education” when sending money for tuition or living expenses.
• Select the funding source:
  • Education loan from a specified institution: No TCS applies.
  • Personal or family funds: 5% TCS applies on amounts above ₹10 lakh per year.

2. Documentation and Declaration

• PAN card: Required for all LRS transactions. If the PAN is inoperative, higher TCS rates apply.
• Form A2: Must be filled out for every LRS remittance, declaring the purpose and recipient details. Access Form A2 here.
• KYC documents: Standard identification documents required by the bank or authorized dealer.
• Proof of admission or loan: Needed to show the purpose of the remittance.

3. Sending the Money

• Go through an authorized dealer (bank or forex agent): Only these entities can process LRS remittances.
• Pay TCS if required: The bank will deduct TCS at the applicable rate and provide a certificate.
• Retain all records: Keep transaction receipts, TCS certificates, and proof of the source of funds.

4. Carrying Cash

• Indian currency limit: Only ₹25,000 can be carried out of India.
• Foreign currency declaration: If carrying more than $5,000 in cash or $10,000 in total (cash, traveler’s cheques, forex cards), you must declare it to Indian customs. Fill out the Currency Declaration Form (CDF) at the airport.
• At U.S. port of entry: Declare any amount over $10,000 to U.S. Customs and Border Protection (CBP). Fill out CBP Form 6059B and, if asked, FinCEN Form 105.

5. Tax and Compliance

• Parents must report gifts for education in their income tax return (ITR).
• TCS paid can be claimed as a credit against income tax liability.
• Maintain clear documentation to prove the source of funds, especially if questioned by Indian or U.S. authorities.

Implications for Pending and Future Applications

For Students Already Planning to Remit Funds:

• If you have not yet sent money: The new TCS threshold and rates apply. For example, sending $100,000 (about ₹83 lakh at July 2025 rates) for education (not via loan) will attract 5% TCS on ₹73 lakh (₹83 lakh – ₹10 lakh), which is ₹3.65 lakh.
• If you use an education loan from a specified institution: No TCS applies, making this the most cost-effective route.
• If you plan to carry cash: This is not recommended. Carrying large sums is risky, requires strict declaration, and can lead to seizure or penalties if undeclared.

For Students Who Have Already Sent Money:

• If the remittance was made before April 1, 2025: The old TCS rates and thresholds apply.
• If the remittance was made after April 1, 2025: The new rules apply, and you should ensure all documentation is in order.

Detailed Step-by-Step Process for Remitting $100,000 for Education

1. Check if you are a resident Indian under FEMA.
2. Decide the purpose: Mark “education” on all forms.
3. Choose the funding source:
   • Education loan (specified institution): No TCS.
   • Personal/family funds: 5% TCS on amounts above ₹10 lakh.
4. Visit an authorized dealer (bank or forex agent).
5. Submit required documents:
   • PAN card
   • KYC documents
   • Form A2 (declaration)
   • Proof of admission/loan
6. Bank deducts TCS if needed and issues a certificate.
7. Funds are transferred to the student’s overseas account.
8. Keep all records for future reference.
9. If carrying cash, declare at Indian customs if over $5,000 (cash) or $10,000 (total).
10. At U.S. entry, declare any amount over $10,000 to CBP.

Declaration Requirements: India and U.S.

In India:

• Form A2: Must be filled for every LRS remittance. Official Form A2 link.
• Currency Declaration Form (CDF): Required at the airport if carrying more than $5,000 in cash or $10,000 in total.
• PAN and KYC: Always needed for LRS transactions.

In the United States 🇺🇸:

• CBP Form 6059B: Fill this on arrival if carrying more than $10,000.
• FinCEN Form 105: May be required for large sums.
• Be prepared to explain the source and purpose of funds.

Tax and Compliance Implications

Indian Income Tax:

• If you funded the remittance with your own money: You must prove the funds came from tax-paid income or an education loan. If not, penalties under Section 69A (unexplained money) and Section 271AAB (penalty of 30–90%) may apply.
• If parents funded it: Treated as a gift for education, usually tax-exempt under Section 56(2), but must be reported in the parents’ ITR.
• TCS credit: Can be claimed against income tax liability.

FEMA Compliance:

• All remittances must be within the annual LRS limit and for allowed purposes.
• Strict declaration rules for carrying currency. Non-compliance can lead to seizure and penalties.

U.S. Customs:

• Mandatory declaration for amounts over $10,000.
• Failure to declare can lead to seizure, fines, or even criminal charges.
• Always carry proof of the legitimate source of funds.

Practical Recommendations for Indian F-1 Students

• Never carry large sums in cash unless absolutely necessary. Use bank transfers for safety and compliance.
• Maintain complete documentation for all remittances and cash carried.
• Consult a chartered accountant or tax advisor before sending large sums to optimize TCS and ensure compliance.
• Stay updated on RBI and income tax notifications, as policies can change.

Safe and Recommended Channels for Remittance

• Bank Transfer (SWIFT): Most secure and traceable. Complies with all LRS and TCS rules.
• Forex Card: Good for daily expenses, but not suitable for large tuition payments.
• Education Loan: Best for avoiding TCS if from a specified institution.

Risks of Non-Compliance

• In India: Seizure of funds, FEMA penalties, and income tax scrutiny.
• In the U.S.: Seizure, fines, and possible criminal charges.

Summary Table

Why These Changes Matter

The Indian government raised the TCS threshold and revised rates to reduce the burden on small remittances and to better track large outflows, especially for non-education purposes. Centralized monitoring by the RBI ensures that all large transactions are closely watched, helping to prevent illegal money transfers.

Stakeholder Views:

• Government/RBI: Aims to keep the economy stable and prevent illegal outflows.
• Banks: Now have more responsibility for collecting TCS and reporting transactions.
• Students and Families: Prefer the education loan route to avoid TCS, and bank transfers for safety.
• Tax Professionals: Advise careful planning and documentation.

Looking Ahead

• No further TCS changes announced as of July 2025, but future adjustments are possible.
• Expect more digital compliance and real-time reporting between banks, tax authorities, and the RBI.
• Remittance rules will remain under review as more Indian students go abroad.

Where to Get More Information

• Reserve Bank of India – Liberalized Remittance Scheme: Official guidelines and updates.
• Authorized Dealer Banks: For help with transactions and TCS.
• Income Tax Department: For TCS credit and compliance.
• U.S. Customs and Border Protection: For declaration rules at U.S. entry.

As reported by VisaVerge.com, these changes mean Indian F-1 students and their families must pay close attention to declaration and documentation requirements, use safe remittance channels, and keep up with evolving rules. Always declare amounts above the set limits, keep all proof of the source of funds, and seek professional advice before making large transfers. This approach will help you avoid penalties and ensure a smooth start to your studies in the United States 🇺🇸.

Learn Today

Liberalized Remittance Scheme (LRS) → A scheme allowing resident Indians to remit up to USD 250,000 abroad annually for permitted purposes.
Tax Collected at Source (TCS) → A tax collected by banks on remittances exceeding specified thresholds under LRS rules.
Permanent Account Number (PAN) → A unique identification number required for all Indian tax-related transactions, including LRS remittances.
Form A2 → Declaration form required for each foreign remittance detailing purpose and beneficiary information.
Foreign Exchange Management Act (FEMA) → Indian law defining resident status and regulating foreign exchange transactions including LRS.

This Article in a Nutshell

Changes to India’s Liberalized Remittance Scheme affect Indian F-1 students funding U.S. education, imposing new tax and declaration rules starting April 2025.
— By VisaVerge.com