LRS Guide for Medical Treatment Abroad (2026)

When a family member needs medical treatment abroad, one of the first questions that arises is: how do I legally pay for it from India?

The answer lies in the Liberalised Remittance Scheme (LRS), the RBI framework that allows resident Indians to send up to USD 250,000 per financial year. Whether it’s surgery in the US, diagnostics in Singapore, or long-term rehab in Europe, LRS provides the legal and compliant route to move money.

But healthcare remittances have their own nuances. 

• What is LRS
• Legal Medical Expenses
  • Treatment costs
  • Patient Maintenance
  • Attendant Costs
  • Emergency Medical Treatment Abroad
  • Purpose Code (S0304)
• Handling Costs Beyond USD 250,000
• Documentation Requirements
• Illegal or Misclassified Expenses
• Credit Card for Medical Treatment
• TCS on Healthcare
• How to claim back TCS
• Conclusion
• FAQs

What is LRS?

The Liberalised Remittance Scheme (LRS) is the framework through which resident Indians can legally send money abroad. 

• Under the scheme, every individual is allowed to remit up to USD 250,000 per financial year (April–March) for permitted purposes such as travel, education, medical treatment, or investments.
• All remittances under LRS are reported by banks to the Reserve Bank of India (RBI) and tracked against your PAN.
• If your total outward remittances cross ₹10 lakh in a financial year, certain payments also attract Tax Collected at Source (TCS).

Legal Medical Expenses Under LRS

When it comes to healthcare, the Reserve Bank of India classifies overseas medical remittances under Purpose Code S0304 – Travel for Medical Treatment. This ensures that legitimate medical costs are fully covered under the Liberalised Remittance Scheme, provided you document them correctly with your bank.

What’s Allowed

Reference Table

Key Takeaways

• $250,000 annual cap per individual applies, but can be exceeded if supported by a hospital/doctor’s estimate and approved by your bank.
• All remittances are linked to your PAN and reported to the RBI.
• Using the correct purpose code (S0304) is critical; misclassification (e.g., sending to an individual without proof) can lead to banks tagging it as family maintenance and charging a higher TCS of 20% instead of 5%.

Common Questions

Can multiple family members send money for the same patient’s treatment?
As per RBI, “remittances under the facility can be consolidated in respect of family members subject to each complying with the terms of the Scheme.” This means every family member has their own USD 250,000 limit, and banks may allow pooling for the same treatment if proper documents and purpose codes are used.

Can I remit money to the patient’s own account abroad, instead of directly to the hospital?
Yes, but banks will ask for supporting medical documentation (admission letter, hospital estimate). Without proof, they may classify it as family maintenance instead of medical, which attracts a higher TCS rate.

What about elective or cosmetic procedures?
If there’s a valid doctor’s prescription or medical recommendation, banks usually process them under the medical code. Purely cosmetic or leisure treatments without medical necessity may be flagged or rejected.

Is the attendant’s travel fully covered?
Yes, but for one attendant only. Their airfare, stay, and basic living expenses can be remitted, provided it’s linked to the patient’s treatment.

If my treatment cost exceeds USD 250,000, what happens?
You can still remit beyond the standard limit by providing a hospital/doctor’s estimate to your Authorised Dealer bank. Banks are allowed to release foreign exchange above the LRS cap for bona fide medical treatment. (Official Guideline)

Handling Costs Beyond USD 250,000

When it comes to overseas medical treatment, bills can often exceed the standard USD 250,000 annual LRS limit. RBI has made specific provisions for such situations.

As per RBI: “Remittances under the facility can be consolidated in respect of family members subject to each complying with the terms and conditions of the Scheme.”

Thus there are two clear ways families can legally handle costs beyond the individual quota:

Route A: Exceeding USD 250,000 on a Single PAN

• In cases where a single patient’s treatment cost is more than USD 250,000, the authorised dealer (AD) bank may release foreign exchange beyond the limit, provided it is backed by a bona fide hospital estimate or invoice.
• No separate RBI approval is required. The bank will review the documents and report the remittance under the correct purpose code (S0304 – Medical Treatment).

Documents required:

• Detailed hospital estimate or invoice.
• Admission letter or doctor’s certificate confirming the need for treatment abroad.
• Standard LRS forms (Form A2, PAN, passport/visa).

Route B: Pooling Across Family Members’ Quotas

• Since each resident individual has their own USD 250,000 annual quota, family members can combine their limits to cover a single patient’s costs.
• For example, if the father has already used his USD 250,000 quota, the mother (or another family member) can remit additional funds under the same purpose code (S0304).
• As long as the remittance is backed by the patient’s hospital documents, it is coded as medical treatment — not as “gift” or “family maintenance.”

Documents required:

• Same hospital invoice and admission letter can be submitted by multiple family members.
• PAN, passport/visa of each remitter.
• LRS declaration for each family member’s remittance.

Example

A surgery in the US is estimated at USD 400,000.

• The father remits USD 250,000 (using his full LRS limit) with the hospital invoice.
• The mother remits the remaining USD 150,000 under her own LRS quota, attaching the same hospital documents.
• Both transactions are reported to RBI under S0304, and only 5% TCS above ₹10 lakh per PAN applies — not 20%.

Key takeaway: Families don’t need to worry if one person’s quota is exhausted. With proper hospital documentation, either a single remitter can exceed the USD 250,000 cap, or multiple family members can legally pool their limits.

Documentation Requirements

When remitting funds abroad for medical treatment, banks need to verify the legitimacy of the expense. Typically, your Authorised Dealer (AD) bank will ask for the following:

Identity & Compliance Documents

• Valid passport and visa of the patient (and attendant, if applicable).
• PAN card (for tracking against LRS limit).
• Form A2 and the LRS declaration confirming the purpose of remittance.

Medical Proof

• A hospital estimate or invoice indicating treatment cost.
• Doctor’s certificate or admission letter from the overseas medical institution.
• For emergencies, proof of admission or urgent care note.

Special Cases

• If remitting to the patient’s overseas account (instead of directly to the hospital), banks may ask for additional supporting documents to establish that the funds are strictly for medical use.
• For attendant remittances, documents showing the patient’s admission and relationship to the attendant.

Please Note: Requirements may vary slightly across banks, but keeping these documents ready ensures your transfer is processed quickly without queries or rejections.

Illegal or Misclassified Expenses

Not every remittance linked to a trip abroad can be classified under the medical treatment code (S0304). Misusing the category may lead to higher TCS, rejection by your bank, or even FEMA scrutiny.

What Is Not Allowed Under “Medical”

• Gifting money to relatives abroad: RBI does not permit using the medical head to send funds to another Indian resident’s overseas account. Each individual must use their own LRS quota.
• Non-medical travel or leisure costs: Sightseeing, shopping, or holiday expenses must be coded under personal travel (S0301), not under medical.
• Incorrect purpose coding: If a remittance is made to an individual account without proper hospital documents, banks may classify it as family maintenance instead of medical. This attracts a higher TCS rate of 20% rather than the concessional 5%.

General Prohibited Uses Under LRS

• Crypto and virtual digital assets – outward remittances for buying crypto are not permitted.
• Speculative forex, margin trading, or derivative bets.
• Lottery, betting, or gambling.
• Transfers to FATF blacklisted or non-cooperative countries.

Please Note: Always align your documents, purpose code, and beneficiary details with the actual medical need. Any mismatch can push your transfer into a higher-tax or prohibited category.

Common Questions

What happens if I accidentally use the wrong purpose code?
The bank may reject the transfer or reclassify it. If it gets tagged as family maintenance instead of medical, you could end up paying 20% TCS instead of 5%.

Can I send money to my relative’s account abroad and call it “medical”?
No. RBI does not allow you to fund another Indian resident’s overseas account under medical. Each person must use their own LRS limit.

Are cosmetic or elective procedures covered under medical?
Only if you have a doctor’s certificate or medical recommendation. Purely cosmetic or elective procedures without medical necessity may be rejected.

If I mix holiday expenses and hospital bills in one transfer, will it be accepted?
No. Holiday costs must be remitted under personal travel (S0301). Only hospital and treatment-related costs can be classified under medical (S0304).

Can I use my medical remittance quota to pay for insurance or post-treatment rehab?
Yes, if linked to the treatment and backed by hospital/doctor documents. Without proof, it risks being misclassified.

Credit Cards for Medical Treatment

From FY 2025–26, all international credit, debit, and forex card spends abroad are treated as LRS transactions. That means paying a hospital bill with your card, loading a forex card for treatment, or wiring funds directly, everything is counted under your USD 250,000 LRS cap and the ₹10 lakh TCS threshold.

Key Takeaways for Patients and Families

• One common threshold: Whether you swipe your card abroad, load a forex card, or remit via your bank, it all adds up to the same ₹10 lakh annual exemption per PAN.
• Medical advantage: Once you cross the threshold, medical spends attract a concessional 5% TCS, unlike tourism spends which are charged at 20%.
• Documentation is crucial: Always keep your hospital invoice, doctor’s letter, or admission note ready, so your spend is classified correctly under medical (S0304) and you don’t get charged at the higher 20% rate.

Common Questions

If I swipe my international credit card at a hospital abroad, does it fall under LRS?
Yes. From FY 2025–26, all overseas credit, debit, and forex card spends are counted under LRS and tracked against your PAN.

What is the TCS rate for medical spends on cards once I cross ₹10 lakh?
It is 5% on the amount above ₹10 lakh, provided you have hospital documents to support the medical classification.

Is the ₹10 lakh exemption separate for cards and bank remittances?
No. The exemption is common across all modes — credit card, debit card, forex card, or bank transfer. Everything adds up under the same ₹10 lakh threshold.

What documents do I need if I pay by card?
Banks may ask for hospital invoices, doctor’s letter, or admission notes to confirm the medical purpose so that you are charged 5% TCS instead of 20%.

TCS on Healthcare (How It Really Works)

TCS applies only when your total outward remittances under LRS cross ₹10 lakh per PAN, per financial year (April–March).

• Up to ₹10 lakh: no TCS.
• Above ₹10 lakh: TCS applies on the excess amount at the prescribed rate.

How to Claim Back TCS on Healthcare

TCS collected on your overseas medical spend is not an additional cost. It is an advance tax that you can adjust against your final income-tax liability or claim as a refund.

Where TCS Appears

• Every bank or card issuer that collects TCS deposits it against your PAN.
• These entries automatically appear in your Form 26AS and Annual Information Statement (AIS) on the income-tax portal.

How to Claim It in Your Tax Return

• While filing your Income Tax Return (ITR), go to the Taxes Paid section.
• Enter the TCS amounts reflected in 26AS/AIS.
• The system automatically adjusts this against your overall income-tax liability.
• If your liability is lower than the TCS already collected, the excess will be refunded to your bank account.

Common Questions

If my hospital bill abroad is ₹9.5 lakh in a year, do I pay TCS?
No. TCS applies only once your total medical remittances exceed ₹10 lakh per PAN in a financial year.

What if my total spend is ₹15 lakh for treatment abroad?
TCS applies only on the excess ₹5 lakh, at 5% = ₹25,000.

Can my spouse also use their own ₹10 lakh limit?
Yes. Each family member has a separate PAN-based limit, so pooling is possible if documents are in order.

Does it matter if I pay by card or bank transfer?
No. From FY 2025–26, all methods - credit card, debit card, forex card, or bank wire are clubbed together under the same ₹10 lakh threshold.

How do I get back the TCS paid?
It shows up in your Form 26AS/AIS and can be claimed as tax credit or refund when you file your ITR.

Conclusion

When it comes to overseas healthcare, the LRS framework is clear: correct purpose coding, proper hospital documentation, and tracking against your PAN are non-negotiable. Getting these right ensures you pay the concessional 5% TCS (instead of 20%) and avoid unnecessary compliance queries.

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 makes Paasa unique is the India-facing compliance layer:

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

Whether it’s equities, ETFs, UCITS funds, or managed strategies, Paasa provides a single transparent platform to manage global portfolios with the confidence that India-specific compliance is taken care of.

Disclaimer

This blog is for informational purposes only and should not be considered investment, tax, or legal advice. The information shared reflects publicly available regulations and our understanding of the Liberalised Remittance Scheme (LRS) as of the date of publication. Rules, tax laws, and RBI guidelines are subject to change, and their application may differ based on individual circumstances.

Overseas medical payments, travel, and investments carry risks, including foreign exchange fluctuations, regulatory changes, and policy updates. Readers are advised to consult their financial, tax, and legal advisors before making any remittance or investment decision.

Paasa disclaims liability for any actions taken solely on the basis of this content.