English
English
English
The Union Budget 2026 has reduced the Tax Collected at Source (TCS) on overseas education remittances under the Liberalised Remittance Scheme (LRS) from 5% to 2% for amounts exceeding ₹10 lakh.
Lower TCS Eases Study Abroad Costs
New Delhi: Budget 2026 presented in Parliament brings relief to Indian students pursuing education abroad and their families. Finance Minister Nirmala Sitharaman has reduced the TCS (Tax Collected at Source) rate on remittances made for education and medical treatment abroad under the Liberalized Remittance Scheme (LRS) from 5% to 2%. This move will reduce the immediate financial burden on families.
Previously, a 5% TCS was applicable on foreign education remittances exceeding ₹10 lakh. Although this was adjustable against the final income tax liability, the higher rate resulted in large amounts being stuck for several months. This reduction in TCS will improve families' liquidity and ease financial pressure at a time of high tuition fees, living expenses, and proof-of-funds requirements.
What gets cheaper and costlier after Union Budget 2026-27? Check full list here
Under the LRS, Indian residents can send up to US$250,000 abroad annually for approved purposes, such as education, medical treatment, travel, and investment. The TCS rate on education-related remittances exceeding ₹10 lakh will now be only 2%. This will apply not only to self-funded remittances but also to remittances made through education loans.
Reserve Bank of India data shows that there was a slow growth in remittances abroad for education at the end of 2025. However, education loan disbursements are increasing, indicating that foreign education remains a priority. This reduction in TCS is seen as a significant financial barrier for families.
Budget 2026 focuses on infrastructure, MSMEs; No tax relief for middle class
According to Zubin Karkaria, Founder and CEO of VFS Global Group, this move will ease financial pressure on students and families and facilitate access to global education. He said that Budget 2026 has indicated a need to promote global human capital and mobility. “The Union Budget charts a clear roadmap towards Vision 2047 by positioning mobility and human capital as engines of growth. Reductions in TCS under the Liberalised Remittance Scheme for education will ease financial pressure on Indian students and families, enabling smoother access to global education opportunities.”
Karkaria added that the government’s broader emphasis on capacity building and ease of doing business complements these measures, strengthening India’s engagement with global travel, education, and services ecosystems. According to him, such steps will play a key role in enhancing connectivity and competitiveness over the long term.
While the reduction in TCS does not reduce the total tax liability, it eases the biggest financial challenge faced when remitting. For middle-income families, this could make the difference, whether they pursue or delay their children's overseas education plans. This initiative in Budget 2026 ensures timely relief and easier access to global opportunities for Indian students.
