Budget 2023 raised the Tax Collection at Source (TCS) rate for foreign remittances under the Liberalised Remittance Scheme (LRS) from 5 per cent to 20 per cent for select transactions. These new rates will kick in from July 1, 2023. However, the higher rate will not apply to expenses for education and medical purposes.

Let's understand how the new TCS rule will impact students who are already studying in foreign universities and schools or are planning to study abroad soon.

How will TCS apply to educational expenses?
Under LRS, there will be no TCS on foreign remittances below Rs 7 lakh for educational purposes. The remittances made for overseas education through an education loan paid abroad will attract a TCS of 0.5 per cent beyond a threshold limit of Rs 7 lakh. Under the LRS, the money remitted abroad, not funded by an education loan, for the purpose of education, will attract TCS at 7 per cent if the amount is above Rs 7 lakh in a financial year.