New Delhi: In the Union Budget 2026 presented on Sunday proposed reduced the Tax Collected at Source (TCS) on outward remittances for education overseas under the Liberalised Remittance Scheme (LRS) from 5 percent to 2 percent.
TCS on self-funded overseas education remittances, earlier levied at 5 percent on amounts exceeding Rs 10 lakh a year, has now been reduced to 2 percent.
“I propose to reduce the TCS rate for pursuing education and medical purposes under the Liberalised Remittance Scheme from 5 per cent to 2 per cent,” the Finance Minister said while presenting the Budget in Parliament.
Analysts and officials say the reduction in TCS is expected to improve financial accessibility for students and families planning overseas study by lowering the initial tax burden on large remittances.
Background on TCS and LRS
Tax Collected at Source (TCS) is a mechanism where banks or authorised dealers collect tax on certain outward remittances from individuals, depending on the purpose of the payment. It is not an additional tax but is adjusted against an individual’s total income tax liability when they file their returns, with any excess refunded later.
The Liberalised Remittance Scheme (LRS), managed by the Reserve Bank of India (RBI), allows resident individuals to remit up to USD 250,000 per financial year abroad for permissible personal purposes such as education, travel, healthcare, investments, and gifts.
