Union Budget 2026 reduces TCS on overseas education and medical remittances from 5% to 2%, easing upfront financial pressure for Indian families.
As global education and international travel continue to rise among Indian families, policy changes that reduce upfront financial pressure can have an immediate and practical impact.
In Union Budget 2026, the Government of India introduced a targeted tax reform that directly benefits students planning to study abroad and individuals travelling overseas. By reducing the Tax Collected at Source (TCS) under theLiberalised Remittance Scheme (LRS), the budget improves affordability, liquidity, and predictability for Indians engaging in overseas education and travel.
Quick Highlights
Presenting the Union Budget 2026, Finance Minister Nirmala Sitharaman announced a reduction in the Tax Collected at Source rate for overseas remittances made for education and medical purposes under the Liberalised Remittance Scheme.
The TCS rate has been reduced from 5% to 2% for remittances exceeding ₹10 lakh in a financial year. This directly lowers the upfront tax collected by banks when individuals send money abroad.
This reform builds on earlier budget measures, where remittances made for education using loans from specified financial institutions were exempted from TCS.
This reform comes at a critical time:
Although TCS is adjustable later during income tax filing, the immediate outflow often becomes a deciding factor. Budget 2026 reduces that pressure, allowing education and travel plans to proceed without delay.
Studying abroad typically involves large remittances for tuition fees, accommodation, and living expenses. Until now, families had to pay a higher TCS amount at the time of transfer, even though it was refundable later.
This directly supports students planning to study in Europe, where proof-of-funds requirements are a key part of the visa process.
Students planning to study in Germany are required to maintain a blocked account to cover living expenses.
Key Requirement
Earlier, remittances above ₹10 lakh attracted 5% TCS, increasing the immediate financial burden on families. With the TCS rate now reduced to 2%, families sending funds for Germany blocked account requirements benefit from clear and measurable financial relief.
This makes planning for Germany student visa requirements more predictable and manageable.
In earlier budgets, remittances made for education through loans from specified financial institutions were exempt from TCS.
Budget 2026 strengthens the framework further by reducing TCS for self-funded remittances, ensuring that students who do not rely on education loans also receive meaningful relief.
This creates a more inclusive system for overseas education funding.
The TCS reduction also benefits individuals and families travelling abroad.
This is particularly relevant for leisure travel, family trips, and frequent international travellers.
Tax Collected at Source is a tax collected by banks or authorised dealers at the time of sending money overseas.
Key Facts About TCS
The Liberalised Remittance Scheme, regulated by the ReserveBank of India, allows Indian residents to send money abroad.
LRS Key Features
Under Budget 2026, the TCS rate under LRS has been rationalised to support genuine overseas needs.
Lower remittance costs make Europe study abroad options more accessible for Indian families. Countries across Europe are increasingly positioning themselves as long-term education and career destinations, and Budget 2026supports this transition by easing financial friction.
For students exploring European education opportunities, this reform improves early-stage planning and financial clarity.
The reduction in TCS aligns with broader policy objectives:
As outbound education and travel continue to grow, predictable and lower tax treatment becomes essential.
Key Takeaways
The change does not eliminate taxes, but it reducesthe immediate financial load, which is often the biggest challenge duringplanning stages
As tax rules, remittance policies, and country-specific requirements evolve, clarity becomes essential.
Winny helps individuals and families by:
In an increasingly interconnected world, clarity and preparation make the difference!
