Understanding the Liberalized Remittance Scheme (LRS)

The Liberalized Remittance Scheme, or LRS, is the RBI’s framework that governs how much money Indian residents can send abroad each year. Under this scheme, individuals can remit up to CAD 340,000 per financial year (equivalent to USD 250,000) for permitted purposes. The LRS covers most personal transactions, including education, medical treatment, travel, maintenance of close relatives, investments, and gifts.

If your transfer purpose falls under one of these categories and your total annual remittance remains within the prescribed limit, you can send money from India to Canada tax-free and fully within the law. The key is to document the purpose accurately and route the transaction through an authorized bank or remittance partner.

Updated TCS Rules for 2025: What’s Changed

India’s 20 percent Tax Collected at Source (TCS) on foreign remittances created confusion when it was first introduced. Thankfully, 2025 brings much-needed clarity. TCS applies only when total outward remittances exceed the threshold amount. Transfers for education and medical expenses are either exempt or subject to a much lower rate.

If your total remittance stays below ₹10 lakh, there is no TCS deduction, allowing you to send money from India to Canada tax-free. Even above this limit, certain categories such as tuition payments made directly to foreign institutions continue to qualify for preferential treatment. In other words, careful planning and proper classification can save you a significant amount.

Why Purpose Codes Matter for a Tax-Free Money Transfer from India to Canada

Every international transfer from India must be tagged with a specific purpose code that identifies why the money is being sent. These codes are how the RBI tracks foreign exchange movement and ensures compliance. Choosing the right one determines whether your transfer remains tax-free or attracts TCS.

For example, code S0305 applies to education expenses, S1104 covers family maintenance, S1301 applies to medical treatment, and S1308 relates to gifts and donations. Using the correct purpose code ensures that your transfer qualifies as a tax-free remittance from India to Canada under FEMA rules. A wrong code can trigger unwanted tax deductions or even delays in approval.

Using NRE Accounts to Keep Transfers Tax-Free

For NRIs who still maintain bank accounts in India, using an NRE (Non-Resident External) account is one of the simplest ways to send money from India to Canada tax-free. Funds held in NRE accounts originate from foreign income and are therefore fully repatriable and exempt from Indian taxes.

If your funds are in an NRO account, which is used for income generated within India, taxation can apply unless you complete Form 15CA and 15CB filings before transfer. Understanding which account to use is critical to keeping your transfer compliant and cost-efficient. An NRE account ensures that every dollar you move to Canada arrives clean, legal, and without TCS deductions.

Planning Transfers to Avoid High TCS

Timing is everything. If you know your remittance amount will exceed ₹10 lakh, consider dividing the transfer into two tranches across separate financial years. This simple planning move keeps each transaction below the TCS threshold and allows you to send money from India to Canada tax-free without triggering additional scrutiny.

For larger transfers, such as those linked to property sales or inheritance, it helps to work with specialists like Remittor, who understand both Indian and Canadian banking regulations. They can structure your transfers strategically, ensuring that documentation, purpose codes, and timing all align to maximize compliance and minimize cost.

Choosing Between Fintech Platforms and Banks

The rise of fintech has changed how NRIs send money abroad. Traditional banks still dominate large-value transactions, especially those tied to property or inheritance, but fintech platforms have revolutionized smaller transfers with better exchange rates and faster delivery times.

Whether it’s family support or tuition fees, you can complete a tax-free money transfer from India to Canada through a fintech or through your bank. With Remittor, you get both the compliance of a bank and the personalized guidance of an NRI-focused team, so every transfer stays smooth and secure.

The Hidden Costs You Need to Watch

Even when you send money from India to Canada tax-free, hidden fees can quietly reduce your final payout. Exchange rate markups, SWIFT network fees, and intermediary bank charges can add up, especially for large transfers.

Choosing a transparent provider is essential. Remittor, for instance, offers pre-locked forex rates and complete disclosure of any banking or processing fees upfront. When you’re moving significant amounts of money abroad, clarity on every rupee matters more than a seemingly lower rate.

The Paperwork That Keeps You Compliant

Compliance is at the heart of every tax-free money transfer from India to Canada. To keep your transaction smooth, ensure your documents are current and accurate. You’ll need your PAN card, valid passport, proof of address, and Form A2 for RBI reporting. For larger transfers, your bank will also ask for Form 15CA and 15CB, certified by a Chartered Accountant.

Supporting documents, such as invoices, admission letters, or family maintenance declarations, help verify your transfer purpose. Having digital copies ready reduces delays and ensures the funds move swiftly from India to your Canadian account.

How to Actually Send Money from India to Canada Tax-Free

The process itself is straightforward when you have the right partner. First, define the purpose and total amount you intend to remit. Then, choose a fully compliant platform that specializes in large-value cross-border transfers and understands the documentation, verification, and tax requirements involved. Complete your KYC, submit the necessary forms, and ensure your purpose code qualifies for exemption.

At Remittor, we handle this entire process end-to-end, ensuring every step is compliant, seamless, and optimized for zero-tax transfers.

‍

Once your bank or Remittor’s advisory team verifies your paperwork, the funds are transferred through an authorized dealer. The entire transaction, from documentation to delivery, can take as little as a few business days, proving that a tax-free transfer from India to Canada can be both fast and fully compliant.

Real Example: Tuition Fees Sent Without Tax

Consider Priya, an NRI living in Toronto whose daughter studies at the University of British Columbia. Each semester, she sends tuition directly from her Indian account using purpose code S0305 for education. Because the transfer amount remains below ₹10 lakh and is categorized correctly, she’s able to send money from India to Canada tax-free. The funds arrive quickly, and no TCS is applied.

This simple approach, clarity of purpose, correct documentation, and compliant routing, can save thousands every year for families supporting dependents abroad.

Claiming Refunds for Deducted TCS

In cases where your bank has deducted TCS by mistake, you can still recover it through your annual Income Tax Return in India. The refund typically arrives within three to six months after filing. While the process may seem tedious, it ensures you don’t lose money that should have been part of a tax-free remittance from India to Canada.

This is another reason many NRIs prefer to work with professional remittance partners who ensure TCS is not deducted in the first place, saving time and paperwork later.

Why Remittor Makes Large Transfers Effortless

Remittor was built for NRIs who value compliance, speed, and complete transparency. The platform helps clients send money from India to Canada tax-free by managing the legal, tax, and banking aspects under one umbrella. Whether you’re transferring property sale proceeds, inheritance funds, or family support payments, Remittor ensures every transaction is legally sound and fully optimized for repatriation.

By leveraging relationships with major Indian banks, Remittor provides better exchange rates, pre-cleared documentation, and a dedicated advisory team that understands both Indian and Canadian financial systems. For NRIs looking for peace of mind, it’s the simplest way to move wealth home to where life is now.

‍

Conclusion: Make Every Dollar Work for You

Sending money abroad doesn’t have to be stressful or expensive. With the right planning, documentation, and expert support, you can confidently send money from India to Canada tax-free and ensure your funds arrive quickly, cleanly, and compliantly.

Whether you’re funding education, supporting family, or transferring wealth for investment, the rules are clear and the opportunities are vast. With Remittor by your side, your money moves across borders as effortlessly as you do because your wealth should never be stuck where your past once was.