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With Budget 2026, the Indian government has taken decisive steps to ease the financial burden on students and families sending money overseas. By revising the TCS rules on foreign remittances – especially for education-related payments – the government directly reduces the upfront tax outflow. As a result, students can manage tuition fees and living expenses more efficiently, while families benefit from improved cash flow and better financial planning for international education.
If you are planning to study abroad, this guide explains the new TCS rules, applicable rates, limits, and how to claim refunds – in simple terms.
Table of contents
- What Is TCS on Foreign Remittances?
- TCS on Foreign Remittance for Education: What Changed in Budget 2026?
- Budget 2026: Key Changes in TCS Rules (At a Glance)
- What Is the Limit of Education Remittance Under LRS?
- How to Claim a TCS Refund on Foreign Remittance for Education
- Does TCS Increase the Actual Cost of Studying Abroad?
- Common Mistakes to Avoid While Paying TCS on Education Remittances
- How Supreme Forex Helps with Education Remittances
- Frequently Asked Questions (FAQs)
What Is TCS on Foreign Remittances?
Tax Collected at Source (TCS) is a tax collected by authorised dealers (banks, forex companies) when an Indian resident sends money abroad under the Liberalised Remittance Scheme (LRS).
Earlier, high TCS rates significantly increased the cost of:
- Overseas education
- Medical treatment abroad
- International travel
However, Budget 2026 has restructured these rates, especially for education.
TCS on Foreign Remittance for Education: What Changed in Budget 2026?
Under the revised TCS framework applicable to foreign remittances for education, no TCS is levied on amounts up to ₹10 lakh in a financial year, regardless of whether the education expenses are funded through personal savings or an education loan.
However, if the total remittance exceeds ₹10 lakh and is paid from personal funds (not an education loan), a TCS of 2% applies only on the amount exceeding ₹10 lakh. This marks a significant reduction from the earlier 5% TCS rate, offering substantial relief to students and parents.
Importantly, remittances made entirely through an education loan from a recognised financial institution continue to attract 0% TCS, even if the amount exceeds ₹10 lakh.
Key Highlight
TCS on education-related foreign remittances has been reduced to 2%
This change applies to:
- Tuition fees
- Living expenses
- University payments
- Education-related remittances under LRS
However, the TCS rate for purposes other than education or medical treatment will remain at 20 per cent.
Why This Matters
Earlier, students had to pay a high upfront TCS, even though it was adjustable later. Now, lower TCS means less money is blocked at the time of remittance.
Budget 2026: Key Changes in TCS Rules (At a Glance)
New TCS Rates After Budget 2026
| Purpose | Source of Funds | Remittance Amount (Per Financial Year) | TCS Rate (Before) | TCS Rate (After) |
| Education (Tuition, Living Expenses) | Personal funds | Up to ₹10 lakh | 0% | 0% |
| Education (Tuition, Living Expenses) | Personal funds | Above ₹10 lakh | 5% on amounts exceeding ₹10 lakh | 2% on amounts exceeding ₹10 lakh |
| Education | Education loan (Indian bank/NBFC) | Up to ₹10 lakh | 0% | 0% |
| Education | Education loan (Indian bank/NBFC) | Above ₹10 lakh | 0% | 0% (Fully Exempt) |
| Education | Loan from an unrecognised source | Above ₹10 lakh | 5% on excess amount | 2% on excess amount |
Key takeaway: Budget 2026 standardizes TCS at 2% for essential overseas expenses, removing high slabs and confusion.
What Is the Limit of Education Remittance Under LRS?
Under the Liberalised Remittance Scheme:
- Maximum limit: USD 250,000 per financial year per individual
- Covers:
- Tuition fees
- Living expenses
- Accommodation
- Other education-related costs
- Tuition fees
This limit remains unchanged in Budget 2026.
How to Claim a TCS Refund on Foreign Remittance for Education
TCS collected can be claimed as a refund or adjusted while filing your Income Tax Return (ITR).
Claiming a TCS refund is straightforward if you follow the right steps –
- Check Form 26AS or AIS – Ensure the TCS amount reflects correctly.
- File your Income Tax Return (ITR) – Declare the TCS under tax credits.
- Adjust against tax liability – If your total tax is lower, the excess becomes refundable.
- Receive refund – The Income Tax Department credits the refund directly to your bank account.
For students with low or no taxable income, most or all of the TCS amount is refunded.
Does TCS Increase the Actual Cost of Studying Abroad?
In the long term, no. While TCS increases the short-term cash outflow, it does not increase the final cost of education because:
- It is fully adjustable against tax
- Refunds are available for excess amounts
- Budget 2026 has lowered rates significantly
Thus, the new TCS structure is far more student-friendly.
Common Mistakes to Avoid While Paying TCS on Education Remittances
Many remitters face issues due to avoidable errors:
- Selecting the wrong purpose code
- Assuming TCS is non-refundable
- Not verifying TCS reflection in Form 26AS
- Using unauthorised remittance channels
Working with a reliable forex partner helps eliminate these risks.
How Supreme Forex Helps with Education Remittances
When sending money abroad for education, choosing the right partner matters.
Why Supreme Forex?
- Best-in-market exchange rates for USD, EUR, GBP, CAD
- Transparent TCS calculation at 2%
- RBI-authorised and compliant with LRS rules
- Dedicated support for students and parents
- Zero hidden charges
- Faster, secure international education remittances
With Supreme Forex, you don’t just save on forex – you stay fully compliant with Budget 2026 TCS rules.
Frequently Asked Questions (FAQs)
Budget 2026 reduced TCS on education remittances under LRS to a flat 2%, making overseas education more affordable.
No. TCS is not removed but significantly reduced. The amount can be claimed as a refund or adjusted during tax filing.
You can claim the refund while filing your Income Tax Return by adjusting the TCS credit shown in Form 26AS.
The annual limit is USD 250,000 per individual, which generally covers tuition and living expenses abroad.
Yes. TCS applies to all education remittances under LRS, regardless of whether payment is made to the student or directly to the institution.
Conclusion
The Budget 2026 changes to TCS on foreign remittances mark a positive shift for Indian students and families. By reducing TCS on education and medical remittances to 2%, the government has eased the financial pressure of studying abroad while maintaining tax transparency.
With the right planning and a trusted forex partner like Supreme Forex, overseas education payments can be simple, compliant, and cost-effective – allowing students to focus on their global academic journey with confidence.
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