Saving of Rs 1.2 lakh instantly when sending this amount abroad, but should you wait till April 1 for this?

Transferring money overseas for a child’s education or a loved one’s medical expenses has always been a hassle. On top of that, families have had to deal with steep currency conversion fees and high upfront taxes.

But good news! The Union Budget 2026 has slashed the Tax Collected at Source (TCS) on education and medical remittances from 5% down to 2% (for amounts exceeding Rs 10 lakh in a financial year under the Liberalised Remittance Scheme, or LRS). For Indian middle-class families, this translates to actual savings of Rs 1.2 lakh upfront when sending Rs 50 lakh in a financial year.

Under the revised framework, effective from April 1, 2026:

• Education remittances: TCS reduced from 5% to 2% (above Rs 10 lakh per financial year)
• Medical remittances: TCS reduced from 5% to 2% (above Rs 10 lakh per financial year)
• Overseas tour packages: Flat 2% TCS (from existing 5% and 20%)

Importantly, TCS applies only to the amount exceeding Rs 10 lakh in a financial year under LRS.

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How much will you actually save when remitting money abroad?

While TCS remains adjustable against your final tax liability, the real story here is not about tax savings; it’s about cash flow relief. And for families sending children abroad or funding healthcare overseas, liquidity matters.

TCS impact on medical and education remittances

TCS is calculated only on the amount exceeding Rs 10 lakh in a financial year under the Liberalised Remittance Scheme (LRS).

Take a look at the table below that shows a clear comparison of the impact on education and medical remittances:

Amount	TCS rate at 5% (FY 25)	TCS rate at 2% (FY 26)	Potential savings
15,00,000	25,000	10,000	15,000
20,00,000	50,000	20,000	30,000
25,00,000	75,000	30,000	45,000
30,00,000	1,00,000	40,000	60,000
50,00,000	2,00,000	80,000	1,20,000

Source: BookMyForex

Note: The figures above illustrate the reduction in upfront tax outgo following the revision in TCS rates from 5% in FY25 to 2% in FY26. All amounts are in INR.

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“For overseas tour packages, the shift to a flat 2% structure drastically lowers the earlier high cash outflows, particularly for remittances above ₹10 lakh, “says Ankit Mehra, CEO & Founder of GyanDhan.

Should you wait until April 1, 2026, to remit funds?

The revised provisions come into effect from April 1, 2026, and until then, the existing TCS rules remain applicable.

“If the total remittance is expected to exceed Rs 10 lakh, it may be financially prudent to schedule transfers on or after April 1 to benefit from the reduced 2% TCS rate, provided that doing so does not jeopardise university payment deadlines, admission confirmations, or visa timelines,” says Mehra.

While the reduced TCS rate improves upfront cash flow for education remittances, careful financial and timeline planning is still critical.

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“The lower TCS rate directly reduces the upfront cash blocked at the time of transfer. This improves working capital flexibility for families, allowing better allocation toward tuition fees, accommodation deposits, living expenses, forex fluctuations, and other time-sensitive requirements,” he adds.

However, financial optimisation should not come at the cost of academic or visa risk. Where deadlines are tight, timely remittance should take priority, as TCS remains claimable while filing income tax returns, he continues.

In short, the revised regime is a welcome liquidity boost for education-focused remittances, but execution must align with institutional timelines and overall financial planning.