Planning to study abroad? Budget 2026 reduces tax burden on education funds

Union Budget 2026 has brought welcome relief for students aspiring to study abroad. By cutting the tax collected at source (TCS) on education-related foreign remittances, the government aims to ease the financial strain on families funding overseas education.

Union Finance Minister Nirmala Sitharaman, while presenting the Union Budget 2026 on Sunday, announced a major relief for students aspiring to pursue education overseas.

The government has reduced the Tax Collected at Source (TCS) on education-related foreign remittances under the Liberalised Remittance Scheme (LRS) to 2 per cent, easing the financial burden on families sending money abroad.

The decision is expected to make overseas education more accessible by lowering upfront costs for students and parents funding tuition fees, living expenses, or medical education abroad.

Under the previous framework, remittances for education exceeding Rs 10 lakh under the LRS attracted a TCS of 5 per cent. Budget 2026 has now brought this rate down to 2 per cent for education and medical purposes.

“I propose to reduce the TCS rate for pursuing education and medical purposes under the Liberalised Remittance Scheme from 5 per cent to 2 per cent,” Sitharaman said during her Budget speech.

It is worth noting that in the Union Budget 2025, remittances made through education loans from specified financial institutions were already exempted from TCS. The latest move extends broader relief to families funding education through personal savings as well.