Union Budget 2026 Makes Sending Money Abroad Easier for Indian Students

Proposed Reduction in TCS Under LRS

Under the Liberalised Remittance Scheme, Indian residents are permitted to remit funds abroad for approved purposes such as education, travel, and medical treatment.

According to the Union Budget 2026 proposals, the following change has been announced:

• TCS on education and medical remittances under LRS has been proposed to be reduced from 5% to 2%.

While TCS is not an additional tax and can be adjusted against the individual’s total income tax liability or claimed as a refund later, a lower rate significantly reduces the immediate cash outflow at the time of remittance an important factor for Indian students and their families.

1. Reduced Upfront Financial Burden

When Indian students or their parents transfer money abroad for tuition fees or living expenses, banks deduct TCS at the point of transfer. With the proposed lower TCS rate, less money is held back, improving short-term cash flow.

2. Easier Proof-of-Funds Compliance

Many universities and visa authorities require proof of sufficient funds before issuing offer letters or visas. Lower upfront TCS deductions ensure that a higher net amount reaches the overseas account, making it easier for Indian students to meet these financial requirements.

3. Smoother Loan-Based Transfers

Even when education loans are used for overseas remittances, TCS applies. A reduced rate means more of the loan amount is available abroad, helping students manage tuition and living expenses more efficiently.

Tax Collected at Source (TCS)

TCS is a tax collected by banks when money is remitted abroad under the Liberalised Remittance Scheme. It is adjustable against income tax or refundable, and does not increase the overall cost of education.

Liberalised Remittance Scheme (LRS)

LRS allows Indian residents to remit up to a prescribed annual limit (generally USD 250,000) for purposes such as:

• Overseas education
• Medical treatment
• Travel
• Gifts and investments

1. Eases the Cost of Studying Abroad

Indian students incur multiple expenses — tuition fees, accommodation, exams, health insurance, and relocation costs. While the total cost of studying abroad remains unchanged, the proposed lower TCS reduces the initial financial pressure, helping families plan better.

2. Supports Global Study Plans

Students planning to study in the United Kingdom or other popular destinations often need to transfer funds at multiple stages — admissions, visa filing, and course commencement. This proposal improves liquidity during these crucial phases.

3. Better Financial Control for Families

Lower upfront deductions give Indian families greater control over cash flow during the most financially demanding stages of overseas education planning.

Here’s how the Union Budget 2026 proposal impacts Indian students planning to study abroad:

• Lower upfront tax deductions on education-related remittances
• Improved cash flow during admissions and visa processes
• Easier compliance with university and visa proof-of-funds requirements
• Smoother overseas transfers for loan-funded education
• Better financial planning for families supporting global education

While this does not reduce the overall cost of studying abroad, it simplifies financial execution at critical stages.

The Union Budget 2026 has proposed a student-friendly change by reducing TCS on education remittances under the Liberalised Remittance Scheme from 5% to 2%. For Indian students planning to study abroad, this translates into lower upfront deductions and a smoother process of sending money overseas.

As more Indian students pursue global education opportunities, staying informed about official policy updates is essential. Many students choose to work with study abroad education consultants to better understand financial rules, documentation requirements, and compliance while planning their overseas education journey.

Official Source

This information is based on the Union Budget 2026 proposals published by the Government of India on the official Union Budget portal:
https://www.indiabudget.gov.in/

1. What is the proposed TCS rate for Indian students sending money abroad for studies?

The Union Budget 2026 proposes reducing TCS on education remittances under LRS from 5% to 2%, lowering upfront deductions for Indian students.

2. Does this proposal reduce the total cost of studying abroad?

No. TCS is adjustable or refundable later. The proposal mainly reduces immediate cash outflow during international transfers.

3. Will Indian students using education loans benefit from this proposal?

Yes. Even when remittances are made through education loans, a lower TCS rate ensures more funds are available abroad at the time of transfer.

4. How does this help with visa and university requirements?

Lower TCS deductions mean higher net funds reach overseas accounts, helping Indian students meet proof-of-funds requirements more easily.

5. What is the Liberalised Remittance Scheme (LRS)?

LRS allows Indian residents to send money abroad for education, medical treatment, travel, and investments within RBI-prescribed limits.

Note: The changes mentioned above are based on Union Budget 2026 proposals and are subject to implementation through official government notifications and guidelines.