Sending Money Abroad in 2026? Know These New Tax
India has introduced two new income tax forms — Form 145 and Form 146 — for anyone sending money overseas. These forms make foreign remittances more transparent, ensure the right TDS is deducted, and put more compliance responsibility on the sender. If you send money abroad for education, travel, investments, or family support, this affects you directly.
India is one of the world's largest sources of foreign remittances — Indian families send over ₹1.5 lakh crore abroad every year for education alone, yet most senders have no idea they're supposed to file tax compliance documents before the money even leaves the country.
If you remit money abroad without proper documentation under the new forms, you could face a 20% TCS deduction upfront on amounts above ₹7 lakh — locking up your cash until you claim it back at tax filing time.
Key Takeaways
Before wiring money abroad in 2026, check whether your transaction requires Form 145 (for the remitter) or Form 146 (for the authorised dealer/bank) — missing these can attract penalties or excess TDS deductions that are hard to reclaim later.
Always verify the applicable TCS (Tax Collected at Source) rate for your remittance purpose — education loans attract 0.5% TCS above ₹7 lakh, while general remittances under the Liberalised Remittance Scheme attract 20% TCS above ₹7 lakh, so proper documentation can save you significant upfront cash outflow.
Keep all supporting documents ready — purpose of remittance, PAN card, invoice or admission letter for education, and bank statements — because Form 145 and 146 require accurate purpose coding, and mismatches can trigger scrutiny from the Income Tax Department.
If you are planning to send money abroad in 2026 — for your child's foreign university fees, an overseas holiday, buying property abroad, or supporting a relative — the Indian government now wants much more paperwork from you before that transfer happens. Two new income tax forms, Form 145 and Form 146, are at the centre of this change.
Form 145 is meant for the person sending the money — the remitter. It requires you to declare the purpose of the transfer, confirm your tax status, and certify that applicable taxes have been accounted for. Form 146 is for the authorised dealer, typically your bank or a registered money transfer service, which processes the transaction. Together, these forms create an audit trail that the Income Tax Department can use to cross-check whether the right TDS or TCS has been collected.
Why does this matter for your wallet? India's Liberalised Remittance Scheme (LRS) allows individuals to send up to USD 2,50,000 (roughly ₹2.1 crore) abroad per financial year. But since 2023, the government has tightened Tax Collected at Source rules — most LRS remittances above ₹7 lakh now attract 20% TCS. That money is not lost forever, but it gets locked until you file your ITR and claim a refund, affecting your short-term cash flow significantly.
The good news: education remittances funded by a loan from a recognised financial institution still attract only 0.5% TCS, and education remittances from own funds attract 5% TCS. Filling Form 145 correctly with the right purpose code ensures you're taxed at the lower applicable rate rather than the default 20%.
Pro tip: Use GoCredit's financial planning tools to estimate your TCS liability before initiating a foreign remittance — it can help you time your transfers smartly across financial years to minimise the cash flow hit. Always consult a CA if your annual overseas transfers exceed ₹7 lakh.
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