Budget 2026’s Overseas Education Relief: TCS Cut to 2% Offers Tangible Savings for Indian Students

In a significant yet understated shift in the Union Budget 2026–27, presented on 1 February, Finance Minister Nirmala Sitharaman introduced a targeted tax concession aimed at softening the financial strain on Indian families financing education abroad. 

Under the Liberalised Remittance Scheme (LRS), the government has slashed the Tax Collected at Source (TCS) on remittances for overseas education from 5 per cent to 2 per cent for amounts exceeding ₹10 lakh in a financial year, a change set to take effect in the new fiscal period.

This recalibration, while seemingly modest in numerical terms, could have a disproportionate impact on aspirants and their families coping with rising global tuition fees and living costs. The upfront burden of having a higher percentage, previously retained at source by banks and authorised dealers, obstructed cash flows and compelled many to defer or scale down study abroad plans. By lowering the rate to 2 per cent, the Budget aims to ease immediate liquidity pressures, offering practical relief without eliminating the levy outright.

Importantly, TCS is not an additional tax; it is adjustable against an individual’s total income tax liability and refundable in excess after filing returns. The measure, therefore, represents both a fiscal recalibration and a symbolic nod to India’s burgeoning global student diaspora.