Education Remittance TCS Shield

Tax collected at source under the Liberalised Remittance Scheme does not apply to the first ten lakh rupees remitted for education in a financial year, regardless of how the education is funded. This threshold rose from seven lakh rupees, effective 1 April 2025. TCS, where it applies, is charged only on the amount remitted IN EXCESS of the threshold for that financial year — not on the whole sum — and the threshold is cumulative across all education remittances made by the same remitter in that financial year, not per transfer.

Where the remittance for education is NOT funded by a loan from a specified financial institution, tax is collected at five percent of the amount remitted in excess of ten lakh rupees in the financial year. Below the threshold, nothing is collected. This is the default rate — it applies to remittances funded from savings, from a family member's funds, or from a loan that does not meet the specified-institution test below.

Where the remittance for education is funded by a loan taken from a financial institution specified for this purpose — broadly, the same class of bank or notified institution whose loans qualify for the Section 80E interest deduction — no tax is collected at source at all, on any amount. Before 1 April 2025 this route still attracted half a percent above the (then lower) threshold; the Finance Act 2025 removed that levy entirely, so a genuine qualifying education loan now carries a nil TCS rate whatever the remittance size. The bank processing the transfer needs to see the loan sanction letter or equivalent proof to apply this rate — ask the sending bank what they require before the transfer, not after.