How Nirmala Sitharaman changed your study abroad budget

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman on Saturday, has given Indian students aspiring to study abroad a tax break. The Tax Collected at Source (TCS) rates on foreign remittances have been revised, impacting the financial planning of these students.

Revised TCS Rates on Foreign Remittances

For educational loans from recognized financial institutions or approved charitable institutions mentioned under section 80E of the IT Act, the following applies:

• Remittances up to Rs 7 lakh: No TCS is applicable.
• Remittances above Rs 7 lakh: No TCS is applicable.

If the educational loan is obtained from an institution not covered under section 80E or for other educational purposes, the TCS rate stands at 5% on the amount exceeding Rs 7 lakh.

As per Section 206C(1G) of the current Income Tax Act, authorized dealers must collect TCS at the rate of 0.5% on remittances up to Rs 7,00,000 per financial year for educational loans from recognized financial institutions or approved charitable institutions under Section 80E of the Act. For remittances exceeding Rs 7,00,000, a 0.5% TCS applied.


If the educational loan is from an institution not covered under Section 80E or is for other educational purposes, the TCS rate remained 5% on the amount above Rs 7,00,000.

Impact on Students

The reduction in TCS rates is expected to ease the financial burden on students and their families, making overseas education more accessible. This move aligns with the government's focus on strengthening the country's education and skill development sectors, as highlighted in the Union Budget 2025-26.

The Union Budget 2025-26 has introduced measures that are likely to make studying abroad more financially feasible for Indian students, reflecting the government's commitment to supporting education and skill development.