Forex Markup on Cards: RBI Rules, TCS & LRS Limits Explained (2026)

If you use an Indian card for international transactions, three regulatory frameworks affect you: the Liberalised Remittance Scheme (LRS), Tax Collected at Source (TCS) on foreign spends, and the Reserve Bank of India’s guidelines on cross-border transactions. Understanding these helps you plan smarter — and zero forex cards interact with all three in specific ways.

What Is LRS (Liberalised Remittance Scheme)?

LRS is the RBI framework that allows Indian residents to remit or spend up to USD 2,50,000 per financial year (April to March) abroad without seeking special RBI approval.

All your international card spends come under LRS. This includes:

• Card payments abroad while travelling
• International online purchases (Amazon.com, subscriptions, SaaS tools)
• Transfers to foreign bank accounts
• Overseas education fees paid by card

Zero forex markup cards work entirely within LRS. Having a zero forex card does not change your LRS limit in any way — it only changes how much you pay in markup charges.

TCS (Tax Collected at Source) on Foreign Spends

This is the part that confuses most people. From October 1, 2023, the Indian government updated TCS rules for LRS transactions:

Current TCS rates (as of 2026):

Key point: If your annual international credit card spend is under ₹7 lakh, TCS does not apply. Most individual travellers fall well under this threshold.

If your spend exceeds ₹7 lakh, TCS is collected upfront by your bank — but this is refundable when you file your income tax return, as it is offset against your income tax liability. TCS is not an additional tax; it is advance tax collection.

Important: TCS is collected by the issuing bank, not by the card network. Whether you use a zero forex card or a regular card, TCS rules apply equally. Zero forex cards do not provide any TCS advantage or disadvantage.

How Zero Forex Cards Save You Money Within the LRS Framework

Within your LRS allowance, the only variable you control is how much forex markup you pay. And this is where zero forex cards make a significant difference:

Example: ₹5 lakh annual international card spend

Annual saving with zero forex card: ₹20,650

This saving is entirely within the legal LRS framework. It is simply using a card that does not charge an unnecessary fee.

RBI Regulations on Forex Markup Disclosure

RBI requires all banks to clearly disclose their forex markup charges in the Most Important Terms & Conditions (MITC) of every card. The MITC must state:

• The exact forex markup percentage
• How GST is applied
• Any other cross-border fees

Banks must also display the effective exchange rate (including markup) on your statement or provide a way to calculate it.

Zero forex markup cards comply with this by disclosing 0% markup — and because there is no markup to add, there are no additional conversion charges beyond the base Visa/Mastercard rate.

What Changed in 2025–2026?

RBI has been progressively tightening KYC requirements for new card applications, which affects how quickly you can get approved for a zero forex card. Most banks now require Video KYC (completed in the app) rather than in-branch visits.

The ₹7 lakh TCS threshold has remained stable, though it is subject to Budget announcements each year. Always verify the current threshold before major international spending.

Practical Checklist for Compliance

Before any international trip or major online foreign purchase:

• Confirm your LRS usage for the current financial year
• Ensure your card’s TCS collection policy is clear (call your bank if spending > ₹7 lakh/year)
• Keep your ITR up to date to claim TCS refunds if applicable
• Use a zero forex card to avoid the 3.5% markup within your LRS allowance

See zero forex cards — save on every international transaction →

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