When Veena Mathew despatched her 23-year-old son to pursue Pc Science in London final yr, she didn’t simply tackle a ₹50 lakh training mortgage – she additionally needed to navigate India’s complicated tax assortment system on overseas remittances.
The TCS aid for abroad training aligns with the finances’s broader imaginative and prescient of “Viksit Bharat,” which emphasises entry to “hundred per cent good quality school education” as a key pillar (HT Picture)
However Union finance minister Nirmala Sitharaman’s newest finances brings some aid to oldsters like Mathew, who finance their youngsters’s abroad training by loans.
The finances has eliminated the Tax Collected at Supply (TCS) on overseas training remittances when funded by loans from specified monetary establishments. Beforehand, such transactions attracted a 0.5% TCS on quantities exceeding ₹7 lakh. The minister additionally raised the overall threshold for TCS on abroad remittances from ₹7 lakh to ₹10 lakh, although non-loan funded training funds will nonetheless appeal to a 20% TCS above this restrict.
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“Foreign education cannot ever be a right reserved for the rich,” mentioned Mathew, a schoolteacher in Rajasthan with an annual revenue of ₹8 lakh. “The middle-class parents also dream to send their children abroad for study and ensure a better future for them.”
For households funding training by loans, the financial savings could possibly be important. The removing of TCS on loan-funded remittances might save households between ₹45,000 to ₹60,000 on remittances as much as ₹10 lakh, offering some aid from the heavy monetary burden of abroad training.
To make certain, TCS remittances will be clawed again as refunds when the individual paying tax information a return.
The adjustments, on the whole nonetheless, supply restricted consolation to these dealing with broader challenges in financing worldwide training. Mathew mentioned that her son’s utility for Rajasthan’s Swami Vivekananda Scholarship for Tutorial Excellence confronted delays and was ultimately rejected, forcing the household to take a personal financial institution mortgage at 12% curiosity.
“We didn’t pay the fees yet but we have to start paying from next month,” mentioned Mathew, who’s now contemplating promoting property to satisfy the obligations. “Even if the TCS reduces a bit of my burden, it would be now a lot for me.”
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The TCS aid for abroad training aligns with the finances’s broader imaginative and prescient of “Viksit Bharat,” which emphasises entry to “hundred per cent good quality school education” as a key pillar. In her speech, Sitharaman outlined a number of home training initiatives, together with broadband connectivity to all authorities secondary colleges, 50,000 new Atal Tinkering Labs, and a ₹500 crore Middle of Excellence for Synthetic Intelligence in training.
For Mathew and different mother and father, this coverage shift on abroad training remittances comes alongside different middle-class targeted measures like zero tax as much as ₹12lakh revenue and simplified tax return submitting.
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The aid on the overall threshold for overseas remittances will assist these making abroad funds on the whole.
Specialists, nonetheless, cautioned that the ₹10 lakh threshold applies collectively to all overseas transactions in a monetary yr, not individually. “If you spend ₹6 lakh on a tour package and later invest ₹4 lakh in foreign stocks, any subsequent foreign remittance that year will attract TCS at applicable rates,” mentioned Mayank Mohanka, founder, TaxAaram India and companion at SM Mohanka & Associates.