Many Indian investors assume that if they can send money abroad for a US stock, they can send it to Coinbase or Kraken for bitcoin too. They can’t. The Liberalised Remittance Scheme (LRS) is not a blank cheque: RBI allows remittances only for permitted current and capital account transactions, and cryptocurrency is not on that list. Even where the purpose is allowed, the bank now keeps 20% of everything above ₹10 lakh a year as tax collected at source (TCS).
What LRS actually allows
LRS lets a resident individual remit up to $250,000 per financial year (April to March) for permitted purposes: education, medical care, travel, gifts, maintenance of relatives, and portfolio investment in overseas listed securities, among others (HDFC Bank’s LRS note). RBI’s own FAQ is blunt that “all other transactions which are otherwise not permissible under FEMA” are not allowed under the scheme, and it singles out margin payments to overseas exchanges.
Crypto never got a permitted category. FEMA works on the principle that capital account transactions are barred unless expressly allowed, so tax and FEMA advisers describe LRS money sent to buy bitcoin, ether or NFTs on a foreign exchange as a FEMA violation, handled by the Enforcement Directorate rather than settled with RBI. Banks typically reject remittances tagged for crypto.
This is not theoretical. The ED issued WazirX a FEMA show-cause notice in 2021 covering crypto transactions worth ₹2,790 crore, largely over funds moved between WazirX and Binance wallets.
The 20% TCS on legal remittances
Since 1 April 2026, TCS on LRS works like this (per HDFC Bank’s notice and the Income Tax Department’s TCS rates page):
| Purpose | Up to ₹10 lakh a year | Above ₹10 lakh |
|---|---|---|
| Education funded by a specified loan | Nil | Nil |
| Education (self-funded) or medical | Nil | 2% |
| Any other LRS purpose, incl. overseas investment | Nil | 20% |
The ₹10 lakh threshold is combined per PAN, across every bank and every purpose in the year. A family trip remittance in May counts against the limit for an investment remittance in December.
BtcMedia calculation: what ₹15 lakh abroad really costs upfront
Take a resident who sends ₹15 lakh in one year to buy a US-listed bitcoin ETF, a permitted overseas portfolio investment:
| Item | Amount |
|---|---|
| Total remitted in the year | ₹15,00,000 |
| Covered by the ₹10 lakh nil-TCS threshold | ₹10,00,000 |
| Amount above the threshold | ₹5,00,000 |
| TCS at 20% on that | ₹1,00,000 |
That ₹1 lakh isn’t lost. TCS shows up in your Form 26AS and AIS and is credited against your final tax, so you get it back through your ITR. But it sits with the government for up to a year, which is a real cost of cash for an investor. The ETF itself is then taxed under the overseas-securities rules we covered in our US bitcoin ETF tax piece, and our ETF vs bitcoin tax calculator runs the numbers.
For direct crypto, there is no compliant LRS figure to calculate, because the remittance itself isn’t allowed.
What it means for Indian investors
- Buying bitcoin in India is the clean route. Trading in rupees on an Indian exchange involves no cross-border remittance, so FEMA isn’t triggered. Check the platform with our FIU-IND registered exchange checker and compare costs with the crypto exchange fee calculator.
- Domestic crypto is still heavily taxed. Gains are taxed at a flat 30% plus 4% cess, with 1% TDS on sales and no set-off of losses. Our crypto tax calculator shows the net-in-hand figure.
- Offshore apps are a separate risk. Using an unregistered foreign exchange from India raises the access issues in our explainer on whether Binance is legal in India.
- Plan the ₹10 lakh threshold. If you remit for travel, gifts and investments in the same year, they share one ₹10 lakh limit.
BtcMedia verdict: LRS is a route to stocks, ETFs and tuition, not to a foreign crypto wallet. If you want bitcoin itself, buy it at home and pay the domestic tax; if you want overseas exposure, a permitted security is the legal path, and the 20% TCS is a timing cost you recover in your return.
Follow the live bitcoin price in rupees and dollars.
FAQ
Can I use LRS to buy bitcoin on Coinbase or Kraken? No. Crypto is not a permitted LRS purpose, and advisers treat such remittances as a FEMA violation. Banks generally reject them.
Is TCS on LRS an extra tax? No. It is collected in advance and credited against your income tax when you file your ITR, but your money is locked until then.
Does the ₹10 lakh TCS limit apply per bank? No. It is one combined limit per PAN, across all banks, cards and purposes in a financial year.
How we calculated this: TCS at 20% on remittances above ₹10 lakh, per HDFC Bank’s notice of rates effective 1 April 2026, checked 1 Nov 2026, 5 PM IST. This is general information, not financial or legal advice; speak to a chartered accountant for your own case.