Money
TCS on education remittances, and the education loan exemption
In short
Under the Liberalised Remittance Scheme, remittances for education above an aggregate of ten lakh rupees in a financial year attract tax collected at source at 2 per cent, against 20 per cent for most other purposes. Where the remittance is funded by a loan from a financial institution for education, no TCS is collected. TCS is a credit against your tax, not a cost.
Two things about TCS cause unnecessary panic: people think it is a tax on sending money, and they quote rates that changed in 2026.
This is a factual summary, not tax advice. For your own return, speak to a chartered accountant who can see your figures.
The current rates
The Income-tax Act 2025, which came into force on 1 April 2026, sets the rate for remittances under the Liberalised Remittance Scheme above an aggregate of ten lakh rupees in a financial year at 2 per cent where the purpose is education or medical treatment, and 20 per cent where it is not.
Below the ten lakh threshold, no TCS is collected on the remittance.
Older material quoting 5 per cent for education, or a seven lakh threshold, reflects rules that have since been replaced. Some pages on the department's own site still carry the older figures, which is a reason to check the section text rather than a summary table.
| Purpose of remittance | Rate above ten lakh |
|---|---|
| Education, funded by an education loan | Nil |
| Education or medical treatment, otherwise | 2 per cent |
| Overseas tour package | 2 per cent |
| Any other LRS purpose | 20 per cent |
The education loan exemption
Where the amount being remitted is a loan obtained from a financial institution for the purpose of pursuing education, no tax is collected at source. The exemption is written into the section itself, and it replaced an earlier concessional rate rather than sitting alongside it.
In practice the bank needs to see that the remittance is being made out of the loan account or against the sanctioned facility. Sending your own funds and reimbursing yourself from the loan later does not fit the wording.
Why TCS is not a cost
Tax collected at source is collected against your eventual liability. It appears in your Form 26AS and is adjusted when you file, and a refund follows if you have overpaid.
The real cost is the cash-flow gap between the remittance and the refund, which can be most of a year. That is a budgeting problem, and it is a reason to plan the timing of large transfers rather than to avoid them.
If you are weighing a loan partly for this reason, read it alongside the interest deduction and our wider piece on education loans for studying abroad.
Related questions
Is the ten lakh threshold per remittance or per year?
The section refers to an amount or aggregate of amounts exceeding ten lakh rupees, so it is cumulative across the financial year rather than applied to a single transfer.
Can I get the TCS back?
It is adjusted against your income tax liability when you file your return, and refunded if it exceeds what you owe. It appears in your tax credit statement.
Does TCS apply to fees paid directly by the university's portal?
The collection applies to remittances made under the Liberalised Remittance Scheme through an authorised dealer, whatever the payment route. Ask your bank how it treats the specific channel you are using.