LRS for Maintenance of Family Overseas (2025 Guide)

If you have family abroad, chances are you’ve already asked yourself this: “What’s the right way to send them money?”

It could be:

• Paying your child’s rent while they study in the US
• Supporting your spouse who just moved to London for work
• Covering your parents’ monthly living expenses overseas

Most people get stuck on the same doubt - should this be treated as a gift, education expense, or maintenance under RBI’s Liberalised Remittance Scheme (LRS)?

The truth is, using the wrong purpose code doesn’t just confuse your bank, it can also cause FEMA compliance issues and even lead to extra TCS or tax complications later.

This guide clears the confusion with real examples.

Table of Contents

• What is LRS
• LRS for Maintenance
• Who Qualifies as a Close Relative?
• Maintenance vs Gift: What’s the Difference?
• TCS on LRS Remittances
• FAQs
• Conclusion

What is LRS?

The Liberalised Remittance Scheme (LRS) is the RBI framework that allows resident Indians to legally send up to USD 250,000 per financial year (April–March) abroad for permitted purposes like maintenance, travel, education, medical treatment, gifts, donations, or investments.

Every remittance under LRS is tracked against your PAN and reported by banks to the RBI. If your outward remittances exceed ₹10 lakh in a financial year, certain categories also attract Tax Collected at Source (TCS).

LRS for Maintenance

When you send money abroad to support your immediate family’s day-to-day living, RBI classifies this as “maintenance” under the Liberalised Remittance Scheme (LRS). This category is meant for ongoing support, not one-time gifts.

Purpose Code: The correct code to use is S1301 – Remittance for family maintenance and savings. Every bank is required to capture this code while reporting your transfer to the RBI, so choosing it correctly is critical for FEMA compliance.

Who Qualifies as a Close Relative?

RBI refers to the Companies Act, 2013 (Section 2[77]) to define who counts as a close relative. This list includes:

Important note: Grandparents, Cousins, friends, or distant relatives are not considered “close relatives” for the purpose of maintenance. Transfers to them should not be coded under S1301.

Common Use Cases for Maintenance:

• Monthly rent payments for your child studying overseas
• Grocery, transport, and utility expenses for a spouse working abroad
• Health insurance or medical expenses for dependent parents abroad
• Allowance for savings and day-to-day needs of family living outside India

Real-Life Examples

Student Support
A parent remits USD 1,500 per month to their daughter in Boston for rent and groceries. Since this is recurring support for a close relative, the purpose code S1301 (Maintenance) applies. Tuition fees, however, should be coded separately under “Education.”

Spouse Relocation
A husband transfers USD 3,000 to his wife who has just moved to the UK for work, to help with rent and utilities. This qualifies as maintenance. If he were sending to his own UK account instead, it would not be allowed under S1301.

Documentation Typically Required by Banks:

• PAN card of the remitter
• Form A2 (purpose declaration for outward remittance)
• Proof of relationship, such as a passport, birth certificate, or marriage certificate
• Self-declaration of purpose, stating the funds are meant for maintenance of close relatives abroad

Using the right purpose code and keeping these documents ready ensures the transfer is both smooth and compliant with RBI rules.

Maintenance vs Gift: What’s the Difference?

A lot of confusion arises between family maintenance and gifts under LRS. While both involve sending money abroad, the purpose, eligibility, and tax treatment differ sharply. Choosing the wrong code can create compliance issues or even tax liability.

For a deeper dive on gifts, see our detailed guide on LRS for Gifts & Donations.

Real-Life Examples

Example A: Maintenance
A parent remits USD 1,500 per month to their daughter in Boston to cover rent and groceries. Since this is recurring support to a defined close relative, it falls under Maintenance (S1301).

Example B: Gift to Close Relative
The same parent sends USD 10,000 one-time to the daughter for her wedding expenses. This is not ongoing support, so it is best coded as a Gift (S1302). But since she is a close relative, the transfer is not taxable.

Example C: Gift to Non-Relative
You remit ₹1,00,000 to your cousin abroad. Since cousins are not close relatives under law, this must be classified as a Gift (S1302).

• If your cousin is an Indian tax resident, the entire ₹1,00,000 is taxable in their hands, because it exceeds the ₹50,000 threshold for gifts from non-relatives.
• If your cousin is a non-resident, taxation may apply in their country of residence.

TCS on LRS Remittances

Whenever you send money abroad under LRS, banks must deduct Tax Collected at Source (TCS) under Section 206C(1G) of the Income-tax Act. This applies whether the purpose is maintenance or gift.

Current Rule (2023 onwards)

• Up to ₹10 lakh per financial year (per PAN): No TCS.
• Above ₹10 lakh: 20% TCS if the remittance is for investment, maintenance, or gifts (i.e., any purpose other than education and medical).

Key Clarifications

• TCS is not an extra cost. It’s simply collected upfront by the bank and can be claimed back as credit when filing your Income Tax Return.
• TCS is tracked per remitter PAN, not per recipient.

Real life Example

If you remit ₹15 lakh abroad for your spouse’s rent and living costs:

• The first ₹10 lakh is exempt.
• On the remaining ₹5 lakh, TCS of ₹1 lakh (20%) is collected by the bank.
• You can adjust this ₹1 lakh against your final tax liability at year-end.

Note: For both maintenance and gift transfers, the ₹10 lakh threshold applies. Anything beyond that attracts 20% TCS.

If you’re interested in other aspects of the Liberalised Remittance Scheme, explore our detailed guides:
LRS for Education

• LRS for Healthcare
• LRS for Travel
• LRS for Investments
• LRS for Education
• LRS for Gifts & Donations

FAQs

Can I send maintenance to cousins or friends?
No. Under RBI rules, maintenance (S1301) is only for close relatives as defined in the Companies Act, 2013 — parents, children, spouse, siblings, son’s wife, and daughter’s husband. Cousins, friends, or distant relatives don’t qualify.

• If you send money to them, it must be coded as a Gift (S1302).
• Remember: gifts above ₹50,000 to non-relatives are taxable in the recipient’s hands in India. For more, see our guide on LRS for Gifts & Donations.

How do I separate maintenance from education expenses?

• Education (S1107) covers tuition, admission fees, exam fees.
• Maintenance (S1301) covers living expenses: rent, groceries, utilities, transport, insurance.

Example: If you pay USD 25,000 as tuition directly to a US university, use Education. If you send USD 1,500/month for your child’s rent in Boston, that’s Maintenance.

What about medical treatment?
Medical expenses (S1108) are a separate bucket. RBI allows remittances above USD 250,000 if supported by medical documents, with no overall cap. Maintenance is capped at USD 250,000 per year.

Example: Paying a hospital abroad for surgery = Medical. Sending USD 1,000/month for your father’s day-to-day living while he recovers = Maintenance.

Can both parents remit for the same student abroad?
Yes. Each Indian resident has their own USD 250,000 annual LRS limit. A father and mother can each remit to the same child, doubling support to USD 500,000.

Example: Father sends USD 120,000 for tuition + maintenance; mother sends USD 100,000 more. Both within individual caps.

Can I send money to my own overseas account as “maintenance”?
No. Maintenance is strictly for close relatives. Transfers to your own account abroad are coded differently (like S1304 – remittance to own account). Mis-coding this as maintenance can trigger FEMA violations.

Do banks require invoices, or is self-declaration enough?
Usually, banks only need a self-declaration of purpose (Form A2 + relationship proof). Invoices are not required for maintenance, unlike tuition/medical.

Example: Parent sends USD 2,000/month for rent. Bank only collects declaration + relationship documents.

Does maintenance attract TCS?
Yes, if the annual outward remittance crosses ₹10 lakh under your PAN.

• Below ₹10 lakh: No TCS.
• Above ₹10 lakh: 20% TCS on the excess, since maintenance falls in the “other purposes” bucket.

Example: If you remit ₹15 lakh for maintenance, the bank collects ₹1 lakh as TCS (20% of ₹5 lakh). You can claim this back in your ITR.

What happens if I wrongly select “Gift” instead of “Maintenance”?
It still counts toward your LRS limit, but the classification may trigger tax complications:

• Gifts to close relatives are tax-free, so there’s no issue if coded wrongly in that direction.
• But if you select gift when it’s maintenance, your bank record will show the wrong purpose which could complicate audits or overseas compliance. Always pick the correct code.

Can I remit more than USD 250,000 under maintenance?
No. The USD 250,000 limit per individual per year is strict for maintenance and gifts. Only education and medical allow remittances above this cap with supporting documents.

That’s why it’s critical to classify correctly and check our Education and Healthcare guides.

Can I pay expenses directly (like a landlord or insurance company)?
Yes, but the classification depends:

• Paying rent directly to your child’s landlord abroad can still count as Maintenance if declared properly.
• Paying tuition directly to a university must be coded as Education.
• Paying hospital bills directly = Medical.

Conclusion

Maintenance under LRS looks simple on paper, but the fine print matters. Only close relatives (as defined by law) qualify, and expenses like tuition or medical bills should not be tagged under maintenance but under their respective categories. 

Misclassification can trigger compliance issues, lead to higher TCS outflows, or even delays at your bank.

If you are supporting children, a spouse, or parents abroad, make sure you choose the S1301 (Family Maintenance and Savings) code, keep relationship proof ready, and understand how it differs from a gift transfer.

Need clarity on your remittance?

Paasa is a global investing platform for Indian investors, enabling access to equities and strategies across markets such as the US, China, Europe, Japan, and beyond. Our clients use Paasa to build globally diversified portfolios, from direct stocks to curated managed strategies.

Every cross-border allocation sits within the FEMA and LRS framework, and our team has developed strong in-house expertise in compliance, documentation, and purpose code selection. While remittance itself is not our core offering, we support investors in structuring flows so that their global allocations remain cost-efficient and fully compliant.

If you would like expert guidance on how FEMA and LRS apply to your family maintenance remittances, you can reach us at [email protected] or schedule a consultation with our team.

About Paasa

Paasa is an Indian investor’s gateway to global investing, trusted by HNIs, family offices, and institutions to diversify into markets across the US, Europe, China, Japan, and beyond.

What sets Paasa apart is its India-facing compliance layer:

• FEMA and LRS compliance embedded into every transaction.
• Tax reporting and analytics built for Indian investors (LTCG, STCG, dividend tax, TCS tracking).
• End-to-end support for remittance structuring, reconciliation, and compliance queries.

Whether it’s equities, ETFs, UCITS funds, managed strategies, or even helping you protect your RSUs from estate tax, Paasa provides a single transparent platform for global portfolios with the confidence that India-specific compliance is taken care of.

Disclaimer

The information in this blog is provided for general educational purposes only and should not be taken as legal, tax, or financial advice. RBI regulations, FEMA provisions, and Income Tax rules governing outward remittances are subject to change, and interpretation may vary across banks.

Readers are advised to consult their bank, tax advisor, or legal professional before executing any remittance. Paasa does not provide remittance services directly; we assist clients in understanding compliance requirements as part of their global investment and wealth management needs.

While every effort has been made to ensure accuracy, Paasa makes no representations or warranties regarding completeness or applicability of the content. Reliance on this information is at your own risk.