Budget 2025: Changes In TCS On Foreign Remittance

The Union Budget 2025 has introduced a significant relief for students aspiring to study abroad. One of the most notable updates is the exemption of Tax Collected at Source (TCS) on foreign remittance for education when funded through an education loan, up to ₹10 lakh. This move will ease financial burdens and encourage more students to pursue their academic dreams overseas without additional tax hassles.

Understanding TCS on Foreign Remittance

Tax Collected at Source (TCS) is a tax on money sent abroad under the Liberalised Remittance Scheme (LRS). Before this budget change, remittances exceeding ₹7 lakh were subject to TCS, even for education. However, the latest budget raises this threshold and exempts education loan-funded remittances up to ₹10 lakh, benefiting thousands of students and their families.

How Does This Benefit Students Seeking Education Loans?

If you’re planning to fund your studies abroad through an education loan, here’s what this budget update means for you:

• No TCS on Education Loan-Funded Remittances Up to ₹10 Lakh: If your tuition fees and other educational expenses are funded via an education loan, you won’t have to pay TCS on remittances up to ₹10 lakh.
• Reduced Financial Burden: Students and parents will save on unnecessary upfront tax payments, making studying abroad more affordable.
• More Savings, Less Hassle: Previously, remitting money abroad for education meant paying TCS and later claiming a refund while filing income tax returns. With this exemption, you won’t have to worry about extra deductions and delayed refunds.
• Encouragement for Higher Education Abroad: This move supports students aspiring to pursue international degrees by making foreign education financing more cost-effective.

What About Self-Funded Education?

For students self-funding their education abroad, a 5% TCS will still apply if the remitted amount exceeds ₹10 lakh. While the exemption primarily benefits those taking education loans, self-funded students will still see a lower tax burden than previous thresholds.

Other Key Changes in TCS on Foreign Remittance Under Budget 2025

Apart from the education loan exemption, here are other significant changes in TCS regulations under the new budget:

Category	Then	Now
Education Loan-Funded Remittances	TCS applied beyond ₹7 lakh	No TCS up to ₹10 lakh
Self-Funded Education Remittances	TCS at 5% above ₹7 lakh	TCS at 5% above ₹10 lakh
Foreign Travel Remittance	TCS at 5% beyond ₹7 lakh	TCS at 5% beyond ₹10 lakh
Other Remittances (Investments/Gifts)	TCS at 20% beyond ₹7 lakh	No change
Medical Remittances	TCS at 5%	No change
Credit Card Transactions	Considered under LRS	Now Exempted

• Higher Exemption Limit: The threshold for TCS on foreign remittance has been increased from ₹7 lakh to ₹10 lakh, making international transactions more flexible for travellers, students, and investors.
• TCS on Foreign Travel:  If remittances exceed ₹10 lakh for travel purposes, a 20% TCS will apply unless exemptions are provided under specific circumstances.
• Credit Card Transactions Exempted: Spending through international credit cards will not be considered under LRS, meaning it won’t attract TCS. This is a significant relief for frequent travellers.
• Medical Remittances: Similar exemptions apply to medical expenses, reducing the financial strain on individuals seeking treatment abroad.
• Investment in Foreign Assets:  Investors sending money abroad for asset purchases will benefit from a larger tax-free window before TCS begins.

Why This Matters for Study Abroad Aspirants?

Studying abroad is a significant financial commitment, and additional costs can be burdensome. UniCreds allows students to explore the best education loan options without worrying about extra TCS deductions.

At UniCreds, we provide end-to-end assistance in securing education loans from top financial institutions, ensuring you get the best deal tailored to your needs. Our expert advisors help you navigate loan applications, interest rates, and repayment terms, making your study abroad journey seamless and stress-free.

Final Thoughts

The Budget 2025 changes to TCS on foreign remittance for abroad education loan are a game-changer for Indian students. By removing TCS on education loan-funded remittances up to ₹10 lakh, the government has made studying abroad more accessible and financially viable.

Other revisions in TCS regulations also provide further relief for travellers, investors, and medical remittances, streamlining international financial transactions.

If you’re planning to study overseas and need guidance on education loans, UniCreds is here to help.

Get in touch with us today to find the best education loan options tailored for your needs and start your global education journey without financial worries!