What Is TCS on Foreign Remittance for Education?
Tax Collected at Source (TCS) under the Liberalised Remittance Scheme (LRS) is a tax mechanism where banks and authorised dealers collect tax on foreign remittances made by Indian residents. For students pursuing education abroad, TCS applies when remitting funds for tuition, accommodation, or living expenses.
The Union Budget 2025 introduced updated thresholds and exemptions to ease financial pressure on Indian students and their families.
TCS Rates for Indian Students Going Abroad in 2025
Type of remittance | TCS Rate | Threshold |
| Education via specified education loan | 0% | No TCS applicable |
| Education via personal funds/non-specified loan | 5% | Above ₹10 lakh per financial year |
Remittance for overseas travel (non-educational) | 20% | Above ₹7 lakh per financial year |
Key Terms:
- Specified education loan: Loan taken from a financial institution defined under section 80E of the Income Tax Act.
- Personal funds: Remittances made from personal savings or non-specified loans.
How to Avoid or Reduce TCS on Overseas Education Payments
Indian students and their families can manage or minimize TCS by following these smart strategies:
- Use Education Loans: Choose a loan from a specified financial institution to qualify for 0% TCS.
- Limit Remittance to ₹10 Lakh Annually: Structuring remittances under this threshold avoids TCS.
- Split Transfers: Use joint remittance across family members to stay below individual limits.
- Distribute Payments: Spread your payments across two financial years, if possible.
Which Transfers Are Exempt from TCS in 2025?
TCS exemptions apply in the following cases:
- Remittances for education funded via specified education loans
- Remittances below ₹10 lakh per person per financial year
- Payments made using credit cards (Note: Still under RBI review)
Keep in mind:
- Forex card transactions may become subject to TCS pending clarity.
- Education-related travel is subject to 5% TCS, not 20% like leisure travel.
What Counts as Education Expenses?
TCS on education-related remittances applies to:
- Tuition fees
- University deposits
- Rent or accommodation charges
- Living expenses (food, local transport, books, etc.)
- One-time travel for education
How to Claim a TCS Refund on Overseas Education Remittance
TCS is not an additional tax but an advance tax. If your actual tax liability is lower, you can claim a refund when filing your Income Tax Return (ITR).
Steps to claim a refund:
- Collect your TCS certificate (Form 26AS).
- Include it in your ITR filing.
- Claim the excess amount as a refund.
It is advisable to consult a tax advisor for accurate filing, especially if you’ve remitted large amounts.
Frequently Asked Questions (FAQs)
Is TCS applicable on remittance for studying abroad?
Yes, but it depends on the remittance amount and whether it is funded by a specified education loan.
How much TCS is charged for Indian students in 2025?
If remittance is via an education loan: 0%. If self-funded and above ₹10 lakh: 5%.
Are credit card payments included under TCS?
Currently, no. But future RBI guidelines may change this.
Final Thoughts
The 2025 TCS reforms aim to make overseas education more affordable for Indian students, especially those relying on loans. By understanding the new rules and planning remittances strategically, families can avoid unnecessary tax and simplify their financial planning.
For further updates, always refer to RBI circulars and consult a certified tax advisor.
Disclaimer: This article is meant for education purposes only and should not be considered financial advice. Please consult with an accountant, financial planner or other financial professional with regards to your specific situation.