Cross-Border Payments and LRS Compliance: Ensuring Seamless Transactions with Kyzer Software Trade Automation Solution

Cross-border payments have become an integral part of the global financial ecosystem, fuelled by international trade, investments, and remittances. With the rise of global interconnectivity, managing cross-border payments has grown more complex, particularly for financial institutions in India. The Reserve Bank of India (RBI) regulates these payments through the Liberalised Remittance Scheme (LRS), a framework that governs remittances sent abroad. Recent modifications in tax regulations, especially concerning Tax Collected at Source (TCS) for LRS transactions, have made managing cross-border payments and ensuring compliance a challenging yet crucial task for banks. This is where Kyzer Software’s innovative Trade Automation solutions come into play, streamlining the process while ensuring financial institutions remain fully compliant and capable of handling seamless transactions.

Challenges in Managing Cross-Border Payments

Cross-border payments are inherently complex, involving multiple jurisdictions, financial systems, and regulatory frameworks. In India, the LRS governs how individuals can remit money abroad for various purposes, such as education, medical treatment, travel, and investments. Banks must navigate this regulatory landscape while ensuring accurate and timely processing of transactions.

One of the primary challenges banks face is ensuring compliance with evolving regulations, particularly those related to TCS. The TCS rate is applicable when LRS transactions exceed a certain threshold. With the recent increase in the threshold for TCS from ₹7 lakh to ₹10 lakh per financial year, banks must adjust their systems to reflect these changes and apply the appropriate tax deductions on qualifying transactions.

Additionally, the risk of fraud and money laundering is heightened in cross-border payments. With the growing volume of these transactions, financial institutions must be vigilant in monitoring potential risks and ensuring that every transaction is processed in accordance with regulatory standards. Here, leveraging Trade Finance Automation tools becomes essential to reduce compliance risk and accelerate transaction processing.

LRS Compliance and TCS Provisions

The Liberalised Remittance Scheme allows Indian residents to remit up to  ₹10 lakh per financial year for specified purposes, such as education, medical treatment, and travel. The recent updates to the TCS regulations have raised the threshold for LRS transactions from ₹7 lakh to ₹10 lakh, and removed TCS on remittances for educational purposes funded by loans from specified financial institutions. These changes necessitate that banks accurately track and calculate TCS for remittances exceeding the new threshold.

For self-funded educational remittances and other transactions beyond ₹10 lakh, the standard TCS rate of 5% still applies. Ensuring these deductions are correctly implemented and reported can become cumbersome without advanced tools such as Automated Reporting Tools for Trade Finance.

How Kyzer Software Helps Banks Ensure Seamless Cross-Border Payments and Compliance

Kyzer Software offers comprehensive digital solutions designed to help banks manage the complexities of cross-border payments while ensuring compliance with LRS and TCS regulations. By leveraging automation and intelligent analytics, Kyzer streamlines operational workflows and ensures financial institutions stay aligned with current regulations.
 

1. Automated TCS Calculations and Deductions

Kyzer Software simplifies the TCS computation process for cross-border remittances. With built-in tax logic, the platform automatically calculates and applies the correct TCS rate based on the latest regulatory changes. This ensures accurate deduction and application of tax without manual intervention — a core capability within Kyzer’s Trade Finance Automation Solution

2. Real-Time Monitoring of Transactions

Kyzer’s real-time monitoring tools empower banks to track cross-border transactions instantly, aligning with LRS norms. The system automatically flags transactions that cross the ₹10 lakh threshold and triggers TCS deductions. This proactive compliance ensures broader regulatory consistency.

3. Reduced Operational Overhead

By automating critical tasks such as TCS calculations, transaction checks, and report generation, Kyzer’s Trade Automation Solution significantly reduces the manual workload for banks. This not only leads to operational efficiency but also minimizes error rates and reduces compliance costs — benefits that scale with remittance volume.

4. Scalable and Secure Solutions

With the growing scale of cross-border payments, Kyzer Software’s Trade Finance Automation platforms are designed to meet the demands of both large and mid-sized financial institutions. The system is built with enterprise-grade security protocols to ensure complete data protection, helping banks maintain trust while ensuring compliance.

Conclusion

Cross-border payments play a vital role in facilitating global economic activity, but they come with increasingly stringent regulatory oversight. With the recent updates to LRS and TCS provisions, banks must evolve rapidly to maintain compliance and deliver efficient remittance services.

Kyzer Software provides a powerful suite of digital tools — from automated TCS management to real-time monitoring, regulatory reporting, and full-fledged Trade Finance Automation. By integrating intelligent automation into their systems, banks can confidently manage compliance with LRS norms while offering seamless services to their customers.

To learn how Kyzer can future-proof your bank’s cross-border operations, explore our Trade Finance Automation Solution for Bank’s and Corporates.