Do you think sending money abroad for educational purposes, such as university fees and living expenses, is tax-free? Many assume overseas education remittances come without tax, but that’s a common misconception. Falling for such shortcuts can lead to costly mistakes or even illegal transfers.
So yes, sending money abroad from India for education involves two key taxes, which are TCS (Tax Collected at Source) and GST (Goods and Services Tax).
This simple guide explains the taxes on sending money abroad for education without any jargon and zero confusion. So that you are aware of the applicable TCS and GST and we can help your international money transfer be tax compliant.
Also Read: 6 Hidden Fees When Sending Money Abroad You Miss Out and Tips to Save
TCS on Foreign Remittances for Education
What is TCS?
Under the Liberalised Remittance Scheme (LRS) by the Reserve Bank of India (RBI), Indian residents can send up to USD 250,000 abroad per financial year per person. However, when the amount exceeds ₹10 lakh in a financial year, banks and remittance companies are required to collect TCS.
Who Pays TCS?
The person sending the money (usually the parent or guardian) is liable to pay the applicable TCS. The TCS is collected by the bank or authorised dealer during the transaction and submitted to the Income Tax Department.
TCS Rates Applicable for Education-Related Remittances
| Educational Outward Remittance Funding Methods | Rate of TCS for up to Rs. 10 Lakhs | Rate of TCS for Above Rs. 10 Lakhs |
| Sending money using an education loan from a financial institution | Not Applicable | Not Applicable |
| Sending money not using an education loan (self-financed) | Not Applicable | 5% of the amount above Rs. 10 lakhs |
Can TCS be Refunded?
Yes, irrespective of the remittance purpose, the TCS paid can be claimed back as a refund or adjustment in your ITR payable while filing your Income Tax Return at the end of a financial year.
TCS paid shall be deducted from your overall tax liability, so you only need to pay the remaining ITR payable amount.
However, if your ITR payable is less than the TCS amount paid, the balance amount after ITR will be refunded to you.
How to Claim TCS Refund on Foreign Remittance for Education?
To claim a TCS refund, one must file an Income Tax Return. After ensuring that your TCS information is accurately recorded in Form 26AS, you can proceed with your ITR filing. Your TCS paid shall be automatically added to your tax liability and computed accordingly.
Form 26AS, also known as the Tax Credit Statement, linked to your PAN Card, shows the TCS paid in a financial year and is automatically updated during tax deductions. It can be viewed or downloaded from the Income Tax website.
Step-by-step Guide: How To Claim TCS Refund Online When Filing ITR?
GST on Foreign Remittances for Education
GST on Transaction Fees
Banks and authorised forex dealers charge a service transaction fee for processing international transfers, including those for education. GST is charged at 18% on this service fee.
Let’s say:
Your bank charges ₹500 as a service fee for sending ₹10 lakh abroad as university fees.
GST at 18% is levied on ₹500 = ₹90.
Total bank charge due to GST = ₹590.
GST on International Transfer Amount
The government imposes GST on the transfer amount, but it remains relatively low. The GST is calculated based on the transaction volume, which is divided into three slabs, and it applies the same for outward remittance for education.
| Slabs | GST Payable | Minimum Tax to be Paid | Maximum Tax to be Paid |
| Slab 1 (Up to Rs. 1 lakh) | 0.18% of the total amount sent abroad | Rs. 45 | Rs. 180 |
| Slab 2 (Rs. 1 lakh – Rs.10 lakhs) | Rs.180 + 0.09% of the amount above Rs. 1 lakh to Rs. 10 lakhs | Rs. 180 | Rs. 990 |
| Slab 3 (Above Rs. 10 lakhs) | Rs. 990 + 0.018% of the amount above Rs. 10 lakhs | Rs. 990 | Rs. 10,800 |
Can GST on International Money Transfer be Refunded?
No, unlike TCS, GST on the service fee and the transfer amount cannot be refunded.
Do NRIs Need to Pay Tax for Educational Overseas Money Transfer?
NRIs do not do overseas fund transfers through the LRS Scheme. Therefore, as per the Income Tax Act, their payments to NRE or foreign bank accounts are not subject to TCS. However, they must pay GST charges on currency service charges and transfer amount.
Also Read: What Is The Tax On NRI Repatriation From India?
Tax Planning Tips for Education-Related Remittances
- Keep Track of Remittances
Monitor your total foreign remittances in a financial year to understand when TCS may apply. Staying informed helps avoid confusion and ensures correct TCS deduction.
- Understand the Benefits of Education Loans
If you’re using an education loan from a financial institution to fund overseas education, you’re eligible for a lower TCS rate of 0.5%. This is a provision under Indian tax laws to support international students, so it’s worth exploring if you qualify.
- Maintain Proper Documentation
Preserve receipts of remittances and TCS certificates for smoother ITR filing and to support any refund claims or queries from the Income Tax Department.
- Choose Transparent Service Providers
Opt for banks or forex dealers that clearly disclose their fees and applicable taxes. Since GST applies to their service charges, transparency helps avoid bill shock. Choose the one with low service fees to reduce the GST impact on the forex service charge.
- File Your ITR Timely
If TCS has been deducted on your remittances, you can claim it only if you file your income tax return accurately.
Whether you’re a parent, student, or sponsor, understanding how TCS and GST apply to your international money transfer can help you avoid surprises and ensure compliance through smart planning and timely tax returns.
With the call guidance of forex experts at ExTravelMoney, get a clear awareness and financial insight, and ensure that your transfer for overseas education is both effective and tax-efficient.
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Ann Mariya Job is the Associate Content Writer at ExTravelMoney.com. Holding a Bachelor’s in Journalism, she excels in creating deeply researched, engaging, and crisp content. Her work helps readers understand the complexities of foreign exchange, overseas money transfers, and international travel.