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<figure class="table"><table><tbody><tr><td style="background-color:#DBE8FF;padding:12px;"><ul><li>Union Budget 2026 cuts TCS on overseas education remittances from 5% to 2%.</li><li>The move lowers the foreign education remittance tax for Indian students.</li><li>Students planning higher education abroad will need less upfront money.</li><li>The benefit applies to funds sent under the Liberalised Remittance Scheme (LRS).</li><li>TCS is adjustable or refundable while filing income tax returns.</li></ul></td></tr></tbody></table></figure>The Union Budget 2026 has delivered encouraging news for Indian families preparing to send their children overseas for studies. One of the most meaningful announcements for aspiring global students is the reduction in Foreign Education Remittance Tax, commonly referred to as Tax Collected at Source (TCS) on education-related payments made abroad.Finance Minister, Nirmala Sitharaman announced that the TCS rate on foreign remittances for education will be reduced from 5% to 2% for amounts exceeding ₹10 lakh under the Liberalised Remittance Scheme (LRS), a provision that directly lifts upfront tax costs on funds sent abroad for tuition and living expenses.With this change, the government aims to make higher education abroad less financially stressful by lowering the extra tax burden that was earlier charged at the time of sending money overseas.&nbsp;<h2>What is TCS?</h2>Importantly, Tax Collected at Source (TCS) is not an additional tax. TCS a mechanism where banks or authorised agents collect a small percentage of the remitted amount as tax at the time of overseas fund transfer. It’s designed to improve transparency of foreign remittances and track cross-border fund flows and can be adjusted against the individual’s annual income tax liability when filing returns, with any excess refunded.&nbsp;<h2>What is LRS?</h2>The Liberalised Remittance Scheme (LRS) is an RBI policy that allows Indian residents to send money abroad up to a specified limit (USD 250,000 per year) for purposes such as travel, education, medical treatment, travel and investments.&nbsp;<h2>What Union Budget 2026 means for Indian students?</h2><ol><li style="text-align:justify;">Lower upfront costs when funding education abroad When transferring large sums overseas for tuition, deposits, or blocked account requirements, a lower TCS rate means less money is cut from your payment right away. This makes it easier for students and parents to plan and manage their finances.</li><li style="text-align:justify;">Better affordability under the Liberalised Remittance Scheme (LRS) If a student remits more than INR 10 lakhs in a financial year from a single PAN, the applicable TCS rate will be 2% instead of 5%. This directly helps in reducing the overall budget impact at the time of fee remittance to a foreign institution.</li></ol>&nbsp;<h2>Expected Long-Term Benefits</h2>The revised Foreign Education Remittance Tax policy is expected to:<ul><li>Encourage more Indian students to explore higher education abroad</li><li>Support global exposure and skill development</li><li>Increase formal banking channels for remittance</li><li>Students need less immediate capital</li><li>Parents face less strain on savings</li></ul>&nbsp;<h2>A Positive Change for Students Planning to Study Abroad</h2>Education experts and students are happy with the <a href="https://www.indiabudget.gov.in/" target="_blank" rel="noopener noreferrer">Union Budget 2026</a>, efforts to make studying in another country more affordable. By reducing the tax on money sent overseas for education, the government has removed one of the big costs that used to make studying abroad expensive.This move will benefit a wide range of students from those planning undergraduate and postgraduate study abroad, to aspirants pursuing advanced research, professional degrees, or specialised programmes that require significant funds transferred internationally.&nbsp;Understanding foreign education remittance policies early can help 2026 aspirants plan their study abroad journey smoothly. Plan your overseas education journey with expert team of <a href="https://www.studies-overseas.com/" target="_blank" rel="noopener noreferrer">KC Overseas Education</a> and make the most of the 2026 Budget benefits.

The Union Budget 2026 has delivered encouraging news for Indian families preparing to send their children overseas for studies. One of the most meaningful announcements for aspiring global students is the reduction in Foreign Education Remittance Tax, commonly referred to as Tax Collected at Source (TCS) on education-related payments made abroad.

Union Budget 2026 Brings Financial Relief for Indian Students Planning Higher Education Abroad

Union Budget 2026 Brings Financial Relief for Indian Students Planning Higher Education Abroad

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