Archive · 6 Sep 2025
Tax and Education Loans: Navigating Overseas Education Finances
Going to college abroad can be expensive, and taxes make it even more complicated.
When you send money out of India, you might have to pay a tax called TCS.
However, there are ways to lower this tax.
If you use an education loan to pay for tuition, the TCS is lower.
If you pay for education without a loan, the tax is higher.
You can also get a tax break on the interest you pay on your education loan, but only for a limited time.
Students working part-time must also follow the tax rules of the country they are studying in.
Fintech companies and financial advisors are creating tools to help families manage these taxes and make it easier to plan for the costs of studying abroad.
Education loans from approved lenders attract a lower TCS rate of 0.5% on remittances exceeding ₹7 lakh.
Self-funded education expenses face a 5% TCS on remittances above the same threshold.
Other remittances, such as gifts, are subject to a 20% TCS once the limit is surpassed.
TCS paid can be claimed as a credit when filing income tax returns.
Interest paid on education loans can be claimed as a tax deduction under Section 80E.
- Who
- Indian students and their families financing education abroad.
- What
- Financial and tax implications of education loans and overseas remittances.
- When
- Ongoing, with changes to TCS rates effective from April 2025.
- Where
- International higher education destinations.
- Why
- To understand tax implications and optimize financial planning for overseas education.
- TCS on Education Loans
- 0.5% on remittances above ₹7 lakh per year.
- TCS on Self-Funded Education/Medical
- 5% on remittances above ₹7 lakh per year.
- TCS on Other Remittances
- 20% once the threshold is crossed.
- TCS Claim
- Can be claimed as credit while filing income tax returns.
- Deduction on Education Loan Interest
- Allowed under Section 80E of the Income Tax Act.