Complete Guide to TCS for Foreign Education Fees when Remitting from India

With more Indians exploring studies abroad than ever before, sending money overseas to cover tuition and living expenses has become crucial. Under the Liberalised Remittance Scheme (LRS), students and their parents can remit up to USD 250,000 annually to cover education expenses.

Funding your international education involves navigating India's Tax Collected at Source (TCS) rules. But don't worry, TCS isn't an extra fee. It's an advance tax payment that you can adjust against your income tax liability when filing your returns. This article focuses on TCS for direct education fee payments. (TCS rates on education loans are different and are covered in our guide to TCS on education loan remittances 👉

Understanding TCS regulations is essential for anyone planning to send money abroad for education expenses. In this article, we review TCS on foreign education expenses and explain how to claim a refund when filing your tax return.² We’ll also introduce you to Wise — a convenient option for remitting educational expenses from India and a great companion for international students starting their journey abroad.

What is TCS on Foreign Remittance for Education?

TCS is a tax collected on money transfers from India to overseas. As per the Income Tax Act 1961 (Refer Sec 206C 1(G)) this tax must be collected from the sender. TCS applies when sending money abroad for education – for example, to pay tuition fees and living expenses.

Key points about TCS for foreign education include:⁴

1. TCS applies to all remittance amounts above INR 10,00,000 in a financial year. For instance, if you send INR 12,00,000 during the financial year, TCS is applicable on INR 2,00,000 (the amount exceeding INR 10 lakhs).
2. TCS rates differ depending on the source of funds. If you finance your education through a loan, the TCS rate is 0% - but if you use your own funds, the TCS rate is 5%.
3. TCS applies to funds transferred via banks, transfer providers (such as Wise), debit cards, or forex cards. Payments made using credit cards are not subject to TCS.

TCS Rates on international transfers for Foreign Education purposes

Here are the current TCS rates when sending money overseas for education:⁵

Keep in mind:

1. TCS applies to remittances made through debit cards, banking channels, and forex cards for education purposes.
2. TCS on foreign education does not apply to payments made via credit cards.
3. Transfers for other purposes may have different TCS rates.

How to Pay TCS for Foreign Education Fees

The transfer or service provider is responsible for collecting TCS on foreign education fees. They track your remittances and deduct the TCS amount once your total remittance for the financial year exceeds INR 10,00,000. The applicable TCS is debited from the sender’s account at the time of the transfer.

Both parents and students should note that when TCS is collected, the amount is remitted to the Income Tax Department. TCS may be refundable depending on the individual’s or household’s tax liability. It’s advisable to consult a tax advisor to ensure you can claim the TCS while filing your ITR.

You must provide the necessary documents and information to the Income Tax Department to process any refund. The refund process may take some time, so plan your finances accordingly.

How to check for TCS deducted

Suppose your bank debits your account for TCS when you send money to pay for tuition abroad. How can you verify that TCS was deducted and remitted to the Income Tax Department? The following documents will help:⁶

1. Form 27D: The tax deductor must issue a TCS certificate (Form 27D), which details the remittances made during the year and the TCS amount debited and deposited with the Income Tax Department.
2. Form 26AS: You can view or download Form 26AS from the Income Tax e-filing portal. It reflects the TCS amounts remitted against your PAN.
3. Other Statements: The Income Tax e-filing portal enables you to view/download the Tax Information Statement (TIS) and Annual Information Statement (AIS), which list the TCS deductions.

How to claim TCS Refund on Education Expenses

When you transfer funds abroad for education payments exceeding INR 10,00,000 in a financial year, the transfer provider or bank debits your account for TCS and notifies the Income Tax Department. You can claim a refund when filing your ITR.

Step-by-step guide for claiming TCS

Follow these steps to claim a TCS refund on foreign remittance for education:⁷

1. Gather the necessary documents, including Form 27D, Form 26AS, bank statements, tuition fee receipts, and any overseas expense records. Include education loan documents, if applicable.
2. Declare the foreign remittances made for studies abroad when filing your ITR.
3. Enter the TCS details in the designated section (Schedule TCS) of your ITR.
4. Claim the TCS as a tax credit to offset your overall tax liability.
5. The Income Tax e-portal will compute your income and tax liability, and if eligible, process the TCS refund.
6. The refund will be credited to your registered bank account once your ITR is finalized.

Always consult a tax professional for guidance on the documentation and process required when filing your taxes.

Is TCS on Foreign Education Expenses Refundable?

Generally, TCS debited during a transaction is not refundable once the funds have been sent. However, if the funds are returned unpaid—such as when a remittance is reversed on the same day—the bank may refund the TCS. In other cases, if you have no tax liability, you can claim a full refund when filing your ITR, as TCS is adjusted against your final tax liability.

How to Avoid TCS on Foreign Education Fees

Generally, TCS debited during a transaction is not refundable once the funds have been sent. However, if the funds are returned unpaid—such as when a remittance is reversed on the same day—the bank may refund the TCS. In other cases, if you have no tax liability, you can claim a full refund when filing your ITR, as TCS is adjusted against your final tax liability.

• Schedule your transfers. One way to avoid the 5% TCS charge is to remain below INR 10,00,000 when transferring funds abroad. If possible, split your payment between different financial years.
• Split the payment among family members. The Income Tax Act treats each individual as separate. By splitting the remittance among family members, you can ensure that each person's total transfer does not exceed INR 10,00,000 in a financial year.
• Make use of education loans. Financing your education through a loan allows you to benefit from the lower TCS rate of 0%. In contrast, self-funded remittances incur a 5% TCS rate. (Keep in mind that loans come with interest charges.)

Sending Money Abroad with Wise: A Convenient and Cost-Effective Solution

Wise offers a simple and affordable solution for remitting foreign education fees from India.

Why Choose Wise for Remitting University Fees?

Wise is a reputable global money transfer platform and is approved in India by RBI. Wise provides:

• Convenience: Send money quickly and securely through the Wise app—no need to visit a bank!
• Transparent Pricing: Wise shows the transfer fees upfront and uses the mid-market exchange rate with no hidden markups, ensuring optimal value for your money.
• Easy Account Management: Track your transfers and manage your finances effortlessly using the user-friendly Wise app.

Send money abroad with Wise 🚀

The Wise Account: Your Perfect Companion Abroad

For international students studying in supported countries, the Wise account is an ideal option for managing local funds in your new country.

• Multi-currency Benefits: Hold multiple currencies, including INR, in one account.
• Everyday Spending: In supported countries, you can apply for a linked card for daily expenses, shopping, and ATM withdrawals.
• Seamless International Payments: Send money back home—for example, for loan repayments—at the mid-market exchange rate with low, transparent fees.
• Travel with Ease: Use your Wise card for hassle-free spending and ATM withdrawals while traveling, including trips back to India.

Open your Wise Account 🚀