TCS on money sent abroad for education: what to ask your bank

What TCS on education remittance means

TCS stands for tax collected at source. When money is sent abroad under the Liberalised Remittance Scheme, called LRS, a bank may collect TCS on some payments. For families paying tuition and living costs abroad, this can change how much money leaves the account at the time of payment.

This guide uses one source: a Business Standard report on the Union Budget dated 1 February 2025. It is a report of a Budget proposal. It is not a statement of the rule in force today. Rules change, so confirm the current position with your bank and the Income Tax Department before you plan payments.

TCS on education remittances under the earlier rules

These figures are useful only to understand why families ask about TCS. They help you see that the amount sent, the source of the money and PAN details could all matter. They do not tell you what your bank will collect today.

According to the report, under the earlier rules there was no TCS on remittances up to Rs 7 lakh. Above that, TCS was 0.5 percent when the education payment was funded by an education loan, and 5 percent when it was funded by other income. If PAN was missing, the rates were higher.

In plain words, how the payment was funded made a difference. A loan-funded education payment had a lower rate than one paid from other income. Keeping PAN details correct with the bank also mattered.

What the 2025 Budget proposed on TCS

When you read a news report, look at its date and what it says is proposed, announced or in force. A Budget speech can propose changes that start later, or that are changed before they apply. That is why this guide asks you to confirm the rule rather than relying on the report.

The report says the Budget proposed raising the TCS threshold on LRS remittances from Rs 7 lakh to Rs 10 lakh. It also says the Budget proposed removing TCS on education remittances funded by a loan from a specified financial institution.

A proposal is not the same as a confirmed rule for your payment. Whether a particular lender counts as a specified financial institution, and how your bank applies the rule, are questions for the bank. Do not rely on this summary when sending money.

Questions to ask your bank about TCS

It helps to ask these questions before the first fee deadline, not on the day of payment. Fee deadlines abroad can be strict, and a surprise deduction or a missing document can delay a transfer. A short written reply from the bank lets the whole family plan with the same information.

Ask whether TCS applies to your tuition payment and to your living-cost payments, as these may be sent at different times. Ask whether the answer changes if the money comes from the loan or from family savings. Ask how the loan will be disbursed: straight to the university, or to the student's account.

Ask what PAN details the bank needs, and whether any TCS collected will show in a statement you can use later. Get the answers in writing. A tax professional can explain how any TCS collected is treated for your family.

How TCS affects your study abroad budget

Write the expected payment dates in one list: tuition instalments, the first living-cost transfer and any deposit. Beside each date, note whether it comes from the loan or from family money. Take this list to the bank so the answers match your real payments.

Even when tax collected can be adjusted later, it can still take cash out of your account at the time of payment. Plan for that timing. Families paying part of the cost themselves, sometimes called margin money, should ask how TCS applies to that part.

Read the living cost and tuition guide to separate tuition from living funds, and check the country guides for Germany, UK, Canada and USA. Then put the amount you will actually borrow into the calculator.

TCS is separate from the interest question in our Section 80E guide. Keep both on your list for the tax professional.

TCS on education remittance in short

The February 2025 Budget report described a proposal to raise the LRS threshold to Rs 10 lakh and to remove TCS on loan-funded education remittances from a specified financial institution. Earlier rules had no TCS up to Rs 7 lakh, then 0.5 percent for loan-funded and 5 percent for other education payments, with higher rates without PAN. Confirm today's rule with your bank and the Income Tax Department. This is general information, not tax or financial advice.

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