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The Union Budget 2026 has delivered some financial relief, for thousands of Indian students wanting to study abroad. The government has reduced the Tax Collected at Source (TCS) on overseas education remittances under the Liberalised Remittance Scheme (LRS). This move directly eases the upfront cost burden for families sending money abroad.
At Study Smart, we guide students and parents through every financial and academic step of their overseas education journey, making such policy changes even more impactful for informed planning.
Under the new proposal:
This means families now need to keep aside less money at the time of transferring funds for tuition fees, living expenses, or visa-related requirements.
Studying abroad often requires large lump-sum transfers within short timelines. Many countries ask students to show financial stability even before visas or admissions are confirmed.
For example:
Earlier, such transfers attracted a 5% TCS, temporarily locking up funds until income tax returns were filed. The TCS is refundable or adjustable, but the immediate cash flow impact was substantial.
With the reduction to 2%, families retain more liquidity. This will make planning smoother and reduce short-term financial stress.
The government has observed a significant increase in education loan demand:
Lower TCS rates will help this by reducing the immediate tax impact even when families rely partially or fully on loan-based funding.
What is TCS?
Tax Collected at Source (TCS) is an advance tax collected by banks when individuals send money abroad. It is not a final tax but an upfront deduction that can be adjusted or refunded while filing income tax returns. The earlier higher rate often affected short-term cash flow, making the reduced TCS under Budget 2026 especially beneficial for families funding overseas education.
What is the Liberalised Remittance Scheme (LRS)?
The LRS allows Indian residents to remit up to USD 250,000 per financial year for permitted purposes such as:
Budget 2026 has made this framework more student-friendly by lowering the TCS rate on education-related transfers.
The TCS reduction will :
Overseas education consultants like Study Smart believe this move will encourage more students to consider international education without the fear of funds being temporarily locked due to higher TCS deductions.
Through these changes, the government has understood the global ambitions of Indian students and the financial realities of studying abroad. The move improves affordability, supports smoother financial planning, and aligns policy with the growing demand for international exposure and quality education.
For students and parents navigating overseas education decisions, Budget 2026 brings clarity, relief, and reassurance, making the dream of studying abroad just a little more accessible.
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