What are the legal ways to transfer money from India to the UK?

Transfers must comply with India’s Liberalized Remittance Scheme (LRS), allowing Indian residents to send up to USD 250,000 (approx. ₹2 crore) annually for purposes like family maintenance, education, and investments. The funds can be sent through banks, money transfer operators, or services like SWIFT.

Are there tax implications when transferring money from India to the UK?

For transfers above ₹7 lakh, a 5% Tax Collected at Source (TCS) is applied, but certain transfers, like education or medical expenses, may receive exemptions or reduced rates. For any other purposes like gifts, donations, etc., 20% TCS is applicable. Keep records of these purposes for compliance under India’s Foreign Exchange Management Act (FEMA).

Is there a limit on the amount I can transfer tax-free?

Transfers under ₹7 lakh in a financial year are tax-free; amounts above incur TCS unless specified otherwise (e.g., loans for education). The annual remittance limit under LRS caps at USD 250,000, which can be used tax-free within these categories

What is the benefit of using an NRE or FCNR account for transferring funds?

Funds in Non-Resident External (NRE) and Foreign Currency Non-Resident (FCNR) accounts are tax-free in India. They allow repatriation of both principal and interest, making them efficient for Indian residents moving to the UK temporarily or maintaining non-resident status.

How can Double Taxation Avoidance Agreement (DTAA) help?

DTAA between India and the UK helps avoid double taxation on income. For example, interest from Indian bank accounts can be exempt from UK taxes if taxes are already paid in India, or vice versa. This is beneficial for non-residents managing finances across both countries.

What is the TCS refund process for eligible cases?

If TCS is deducted but not applicable (e.g., for educational loans or medical expenses), individuals can claim a refund when filing their income tax returns in India by showing the appropriate use of funds as per LRS guidelines.

Is it legal to transfer money tax-free from India to the UK?

Yes, up to ₹10 lakh annually is tax-free under LRS. Beyond this, TCS applies but can be claimed in ITR.

What is the cheapest way to send money from India to the UK in 2025?

Digital apps like HOP Remit offer better exchange rates and transparent fees.

What if I send ₹12 lakh for education without a loan?

You’ll pay 5% TCS on ₹2 lakh (₹10,000), which can be claimed as credit.

How do I claim TCS when filing taxes?

TCS shows up in your Form 26AS. Mention it in your ITR under tax credits.

Has the tax-free limit changed recently?

Yes, the threshold was increased from ₹7 lakh to ₹10 lakh effective April 1, 2025.

Can I use multiple family members’ limits to transfer more money?

Yes. Each family member can remit up to USD 250,000 separately under LRS.

Is TCS the same as income tax?

No. It’s an advance tax collected by banks and is fully refundable through ITR.

Can I transfer money for property purchase in the UK?

Yes, under purpose code S0006. TCS at 20% applies beyond ₹10 lakh.

Category – Finance

Transfer Money Tax-Free from India to the UK: A Complete 2025 Guide

Updated On:

Apr 8, 2025

Karthik

Transferring money to the UK is easier than ever, but making sure you’re not paying unnecessary taxes is just as important. If your goal is to transfer money tax-free from India to the UK in 2025, this guide will help you do it the right way. From staying within the RBI’s Liberalized Remittance Scheme (LRS) limits to understanding how TCS applies, we’ve broken it all down into clear, actionable steps—so whether you’re funding education, supporting family, or making an investment, you can do so with confidence and clarity.

LRS Explained: How Much Money Can You Send Abroad in 2025?

The Reserve Bank of India’s Liberalized Remittance Scheme allows Indian residents to transfer up to USD 250,000 abroad per financial year for permitted purposes. This includes education, medical treatment, investments, gifts, travel, and family maintenance. If you aim to transfer money tax-free from India to the UK, staying within this annual limit is crucial.

Pro Tip: Plan your yearly transfers to stay below this limit and avoid additional RBI permissions. Transfers above this limit require specific approvals and documentation.

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Latest TCS Rules for 2025-26: Avoiding the 20% Trap

As of April 1, 2025, the following TCS (Tax Collected at Source) rules apply to foreign remittances:

Purpose of Remittance	TCS Rate	Threshold Limit
Education (via education loan)	0%	No TCS applicable
Education (self-funded)	5% on amount exceeding ₹10 lakh	₹10 lakh per financial year
Medical Treatment	5% on amount exceeding ₹10 lakh	₹10 lakh per financial year
Overseas Tour Packages	5% up to ₹10 lakh, 20% above ₹10 lakh	No threshold
Other Purposes (e.g., investments, gifts)	20% on amount exceeding ₹10 lakh	₹10 lakh per financial year

Note: TCS is claimable as a tax credit while filing your Income Tax Return (ITR) using Form 26AS. If planned correctly, you can transfer money tax-free from India to the UK without bearing any extra cost.

Learn more about how to avoid 20% TCS on foreign remittances legally

TAX HACK BOX: How to Pay Less or Zero TCS

Send in tranches: ₹10L in March, rest in April → Zero TCS

For education: Route via approved loan → Only 0.5% on amount above ₹10L

File ITR? Always claim TCS refund via Form 26AS

Use correct purpose code to avoid delays or excess TCS

Track your total remittance annually to avoid breaching the ₹10L tax-free limit

Real Example: Education Remittance

You need to transfer ₹16 lakh for a UK university fee. If you send ₹10 lakh in March and the remaining ₹6 lakh in April, you avoid TCS altogether. If the payment is routed via an approved education loan, only 0.5 percent TCS applies to the amount above ₹10 lakh. This is how you can transfer money tax-free from India to the UK in a legal and strategic way.

Discover how to pay university fees in the UK from India with zero hidden charges

Smart Transfer Strategies for High-Value Remittances

To ensure that you transfer money tax-free from India to the UK, use the following strategies:

Split Transfers Across Financial Years Planning to send ₹15–20 lakh? Send ₹10 lakh in March and the rest in April to legally avoid TCS.

Route Education Transfers via Loans Use sanctioned education loans to remit above ₹10 lakh at only 0.5% TCS.

Break Up Travel or Investment Remittances Sending ₹12–₹20 lakh for other reasons? Stagger payments if possible to avoid the 20% rate.

Utilize Family Member Quotas LRS allows each individual to send up to USD 250,000 annually. Use multiple family members’ limits strategically.

Example: Sending ₹12 lakh for medical treatment → 0% on ₹10L, 5% on ₹2L = ₹10,000 TCS, claimable in ITR.

For step-by-step guidance on remitting support funds, check out our guide on sending living expenses to the UK from India

Top International Money Transfer Options in 2025 (Compared)

Method	Transfer Time	Fees	Best For
SWIFT Bank Transfer	1–3 business days	INR 500–1500	Large, secure transfers
Money Transfer Services	Same/Next day	INR 200–800	Small-to-medium urgent needs
Forex Cards	Instant for spends	Low annual fees	Convenient in-country spending
Digital Apps (e.g. HOP Remit)	1–2 business days	Minimal, transparent fees	Affordable, fast, mobile-first transfers

Check for the live exchange rates here

Why HOP Remit by moneyHOP Is the Smartest Way to Transfer Money to the UK?

moneyHOP’s HOP Remit simplifies the process to transfer money tax-free from India to the UK. It is optimized for Indian users, offering:

Best exchange rates + full cost visibility

Easy-to-use app to transfer anytime, anywhere

24/7 support for peace of mind

RBI-compliant and transparent

Purpose Codes for LRS Transfers: Ensure the Right Categorization

Every transaction under LRS must be tagged with the correct purpose code:

Purpose Code	Description	Annual Limit
S0305	Education	Up to USD 250,000
S1301	Maintenance of Close Relatives Abroad	Up to USD 250,000
S0301	Travel (personal or business)	Up to USD 250,000
S0006	Investment in Shares or Property Abroad	Up to USD 250,000
S1302	Gifts	Up to USD 10,000
S1303	Donations	Up to USD 250,000

Note: Incorrect coding can result in delays or TCS mismatch.

Avoid These Costly Errors When Sending Money from India to the UK

Documents Required for a Tax-Free Transfer

Make sure you have these documents in place:

PAN Card (mandatory for all LRS transactions)

Purpose declaration form (specifying reason for transfer)

KYC documents as per bank’s requirements

Proof of purpose (e.g., admission letter, invoice, medical bills)

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Conclusion: Make Every Rupee Count When Transferring Abroad

Transferring money to the UK from India can be simple and tax-efficient when you plan smartly. By staying within the LRS limit, understanding TCS rules, and selecting the right remittance method, you can avoid unnecessary charges.

Use a trusted platform like HOP Remit by moneyHOP to make your next transfer seamless, transparent, and fully compliant.

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