Under the RBI's Liberalised Remittance Scheme (LRS), you can send money abroad to cover the living costs of a close relative, such as a child, spouse, parent or sibling, under purpose code S1301 (family maintenance). It counts towards your $250,000 annual LRS limit, and above ₹10 lakh in the year your bank collects 20% TCS, which you claim back in your tax return.
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
The common doubt is whether a transfer like this is a gift, an education expense or maintenance. Using the wrong purpose code can cause FEMA compliance issues and lead to extra TCS or tax complications later.
Table of contents
- What is LRS for family maintenance?
- Who is a close relative under LRS?
- Maintenance vs gift: what’s the difference?
- How much TCS applies to maintenance remittances?
What is LRS for family 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 is a close relative under LRS?
RBI refers to the Companies Act, 2013 (Section 2[77]) to define who counts as a close relative. This list includes:
Relationship | Covered under Companies Act (Sec 2[77])? |
Father (including step-father) | ✅ |
Mother (including step-mother) | ✅ |
Son (including step-son) | ✅ |
Son’s wife | ✅ |
Daughter | ✅ |
Daughter’s husband | ✅ |
Brother (including step-brother) | ✅ |
Sister (including step-sister) | ✅ |
Spouse | ✅ |
Grandparents | ❌ |
Grandchildren | ❌ |
Cousins | ❌ |
Friends | ❌ |
Uncle / Aunt | ❌ |
Nephew / Niece | ❌ |
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
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 banks typically ask for
- 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.
Maintenance (S1301) | Gift (S1302) | |
Who can receive | Only close relatives (as defined under Companies Act, 2013 Sec 2[77]) | Any individual, relative or non-relative |
Intent | Ongoing support for living costs or small savings | One-time or occasional transfer with nothing expected in return |
Examples | Paying rent, groceries, health insurance for a child abroad | Contributing to a cousin’s wedding in Canada |
Documentation | PAN, Form A2, proof of relationship, self-declaration | PAN, Form A2, gift declaration |
Tax Treatment (India) | Not taxable when remitted to close relatives abroad | Gifts above ₹50,000 to non-relatives are taxable in the recipient’s hands |
Maintenance or gift: three 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, the gift can still be taxable for them in India, because money a resident gifts to a non-resident is treated as income arising in India. Their country of residence may tax it too.
How much TCS applies to maintenance remittances?
Whenever you send money abroad under LRS, banks must collect Tax Collected at Source (TCS) under section 394 of the Income-tax Act 2025 (section 206C(1G) of the old Act until 31 March 2026). This applies whether the purpose is maintenance or gift.
Current rule (FY 2026-27)
- 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.
Example. Suppose you remit ₹15 lakh abroad this year 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.
About Paasa
Paasa is a global investing platform for Indian residents and NRIs. It gives you direct access to stocks on their home exchanges in the US, Canada, the UK, Germany, France, Switzerland, the Netherlands, South Korea, Japan, Hong Kong and Singapore, along with ETFs and UCITS funds.
- A dedicated relationship manager: one point of contact for questions about your account and your investments.
- Investing for the family: each family member can hold their own account and invest from their own LRS limit.
- Tax reports in one place: capital gains, dividends and Schedule FA workings, ready for your return.
