Budget 2026, NEP: How Indian students can save 20-40% on foreign education

Education Budget 2026: Lower TCS under the Liberalised Remittance Scheme eases upfront costs for families funding overseas education and medical treatment

The Union Budget 2026 on Sunday brought changes for Indians sending money abroad for education and medical treatment, with a cut in Tax Collected at Source under the Liberalised Remittance Scheme.

 

Finance Minister Nirmala Sitharaman said TCS on remittances for education and medical purposes abroad will be reduced from 5 per cent to 2 per cent, lowering the upfront amount families need to pay while transferring funds overseas.

 

The change applies to money sent directly by families and is separate from education loans, which were given relief last year.

 

Lower TCS for overseas education expenses

 

Under the revised rules, families sending money abroad for education or medical treatment will now pay TCS at 2 per cent instead of 5 per cent. This applies to remittances made under the Liberalised Remittance Scheme.

 

 

“By removing TCS entirely on education loans under Section 80E, raising the self-funded exemption threshold from ₹7 lakh to ₹10 lakh, and reducing TCS on higher self-funded remittances to 2 per cent, the government has eased the upfront financial pressure families face during admissions and visa stages,” said Saurabh Arora, Founder and CEO, University Living.

 

 

How families may still need to plan carefully

 

Arora said the changes work alongside newer education pathways that allow students to start courses in India and move abroad later.

 

“Combined with policy support for NEP-aligned ‘Start in India, Transfer Abroad’ pathways, students can potentially reduce overall education costs by 20–40%,” he said.

 

“That said, families must still factor in currency volatility and ensure their education loans are routed through compliant institutions to fully benefit from these reforms,” he added.

 

 

What was announced last year

 

In the Union Budget last year, the government had removed TCS on education loans taken under the Liberalised Remittance Scheme. This meant families using approved education loans no longer had to pay TCS while sending money abroad for studies.

 

The tax-free limit for family remittances was also revised. Individuals can now send up to ₹10 lakh to family members abroad without TCS. Any amount above this threshold attracts TCS at 20 per cent on the excess.

 

Industry view on impact for students and travellers

 

Zubin Karkaria, CEO, VFS Global, said the measures could ease financial stress for both students and travellers.

 

“Reductions in TCS on overseas tour packages and TDS under the Liberalised Remittance Scheme for education will ease financial pressure on Indian travellers and students, boosting global mobility and connectivity,” he said.

 

Piyush Kumar, Regional Director for South Asia, Canada and Latin America at IDP Education, said the move could widen access to overseas education.

 

“We believe this will improve access to global education opportunities and help Indians, who form one of the largest student cohorts in foreign institutions,” he said.

 

 

Cash flow relief during peak spending stages

 

Vinay Bagri, CEO and co-founder of Niyo, said the lower TCS rate could help at a time when expenses are highest.

 

“Lower TCS significantly improves cash flow at a stage when expenses are heavily front-loaded — from tuition deposits and accommodation to forex and daily living costs,” he said.

 

Ankit Mehra, Founder and CEO of GyanDhan, said the change could make planning easier for families.

 

“The rationalisation of TCS is a welcome policy correction, as it directly improves affordability at the point of payment and aligns tax treatment with the long-term nature of education investments. This move should help parents plan better, reduce dependence on short-term borrowing, and ensure that deserving students are not held back due to avoidable upfront financial strain,” he said.