TCS on education remittances: how it works after Budget 2026

Tax Collected at Source (TCS) is an amount your bank or authorised dealer collects when you send money abroad under the Liberalised Remittance Scheme (LRS). It is not an extra tax: it is an advance payment of your income tax, and you can claim it back or adjust it when you file your return.

Under LRS, a resident individual can remit up to USD 250,000 a financial year for permitted purposes, including education and living expenses abroad.

The Union Budget 2026–27 reduced the rate on education remittances, effective 1 April 2026. As announced, the position for education is:

• Up to ₹10 lakh in a financial year (across all LRS remittances by the same person): no TCS.
• Above ₹10 lakh, funded from your own money: TCS at 2% on the amount above ₹10 lakh (previously 5%).
• Funded by an education loan from a specified financial institution, such as a bank or notified lender: no TCS, a change that has applied since 1 April 2025.

Suppose a parent sends ₹30 lakh for tuition and living costs in 2026–27 from savings, with no other LRS remittances that year. The first ₹10 lakh attracts no TCS. The remaining ₹20 lakh attracts 2%, so the bank collects ₹40,000. That ₹40,000 appears in the parent's Form 26AS and annual information statement and can be set off against their tax liability or refunded when they file their return.

If the same ₹30 lakh were disbursed from an education loan by a bank, no TCS would be collected.

TCS is linked to the PAN of the person remitting. It makes sense for the remittance to be made by the family member who pays income tax and can use the credit. If a student with no income sends the money, they can still claim a refund, but only by filing a return.

Note that the ₹10 lakh threshold is per person per financial year across all LRS purposes, so a parent who also sends money abroad for travel or investment may use up the threshold faster than expected.

• Tell your bank the purpose clearly as education, and keep the university's fee invoice or offer letter ready.
• Pay tuition directly to the university's account wherever possible.
• Plan large remittances around the financial year: splitting payments across two years can use two ₹10 lakh thresholds.
• Compare exchange rates and charges: the TCS saving can be wiped out by a poor rate.
• Keep the TCS certificate and check it against your Form 26AS before filing your return.

Tax rules change with each budget, and the details depend on your circumstances. Confirm the current rate with your bank before remitting, and speak to a tax adviser about claiming credit. This article is general information, not tax advice.