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  • Mar 10, 2023
  • New TCS rate from July: Sending money for children studying abroad to cost more for these expenses

    Soon, parents may have to shell out more money for kids studying abroad. Union Budget 2023 proposed to raise tax collection at source (TCS) for foreign remittances under the liberalised remittance scheme (LRS) from 5 per cent to 20 per cent. This will apply to foreign trips, investing overseas, sending money abroad, and other remittances except for education and medical purposes. However, there are many expenses which parents have to incur for maintenance of their children who live overseas, which may not fall under the category of education expense with regards to taxation and hence, may attract higher TCS.

    Remittance through education loan towards foreign education
    At present, under LRS, remittances made for foreign education, via an education loan paid abroad, attract a TCS of 0.5 per cent for the amount transferred beyond Rs 7 lakh. This will not change going forward either. However, if the source of funding is not education loan, then money remitted overseas even for the purpose of education attracts TCS at 5 per cent if the amount is above Rs 7 lakh.