Sending money abroad for education in 2026: LRS, TCS and forex
Every rupee you send abroad for a degree passes two gates: the RBI's USD 250,000-a-year LRS limit and a TCS charge — nil if the money is loan-funded, 2% above ₹10 lakh if it isn't. How to move tuition abroad in 2026 for the least cost, and claim the TCS back.
Once the loan is sanctioned and the offer accepted, one practical problem remains: getting the money out of India and into a foreign university's account, at the lowest possible cost. Every rupee you send abroad for a degree passes through two visible gates — the Reserve Bank's annual remittance limit and a tax collected at the point of transfer — and one hidden gate, the exchange-rate spread, which quietly costs families the most of the three. Here is how to move the money in 2026 without losing more of it than you have to.
Gate one: the LRS ceiling
Money leaves India for fees and living costs under the RBI's Liberalised Remittance Scheme (LRS), which lets every resident individual send up to USD 250,000 abroad per financial year. The limit is per person, which is the detail families underuse: a student, both parents and a sibling each have their own $250,000, so a household can pool several limits to move a large sum in a single year. Each transfer is made through an authorised dealer bank against a Form A2, declaring the purpose as education.
Gate two: the TCS, and how to get it back
Layered on top of the LRS is Tax Collected at Source (TCS) — and the rules now favour the education remitter more than they used to.
- If the money is funded by an education loan from a recognised financial institution, TCS is zero, whatever the amount. This is the single biggest reason to route fee payments through the loan account rather than from savings.
- If you pay from your own funds, TCS is nil up to ₹10 lakh of education remittance in a financial year, and 2% on the amount above ₹10 lakh — reduced from 5%, effective 1 April 2026. The ₹10 lakh threshold itself was raised from ₹7 lakh in the 2025 budget.
The crucial thing most families miss: TCS is not a tax you have lost. It is a credit. It shows up against your PAN in Form 26AS and the Annual Information Statement, and it is adjustable against your income-tax liability — or refundable when you file your return. Parents who remit for a child's fees can set the TCS against their own tax, or claim it back. Many pay it and never reclaim it, simply because they did not know they could.
The hidden gate: the exchange-rate spread
The gate no one puts on a form is the one that costs the most. When a bank makes a telegraphic transfer abroad, it rarely gives you the true mid-market exchange rate; it builds in a markup, often one to two percent or more, on top of any flat fee. On a tuition-sized transfer that spread dwarfs the fee — on a payment of several tens of lakhs, a one-to-two-percent worse rate is tens of thousands of rupees, quietly gone. Compare the exchange rate, not just the advertised fee. Specialist remittance services frequently beat the bank's telegraphic-transfer rate, and the difference across a full degree can run into lakhs.
How to actually pay the university
There are four common routes, and the right one depends on the payment:
- A bank SWIFT wire — the default for large fee payments; secure, universally accepted, but usually the worst exchange rate. Ask your bank for its all-in TT rate before assuming it is cheapest.
- A specialist remittance service — firms such as Wise or BookMyForex often transfer at or near the mid-market rate with transparent fees. Ideal for fees and for topping up a student's overseas account.
- A university payment platform — many foreign universities route international fees through providers like Flywire or Convera; these can be convenient and compliant, but still compare the rate they quote.
- A forex card — best for a student's day-to-day living costs abroad, not for a large one-off fee. Load it in the foreign currency to lock a rate and avoid per-swipe conversion charges.
The documents to have ready
For an education remittance, keep these to hand: your PAN and the student's, the student's passport, the university's invoice or admission letter, and — to claim the 0% TCS — the loan sanction letter. The bank will have you complete the A2 form declaring education as the purpose. Getting the purpose code right matters: it is what keeps the transfer inside the education rules rather than the general LRS bucket.
One timing move
Because TCS applies per PAN, per financial year, families with a large bill can plan around it: split a big self-funded transfer across two financial years, or across more than one family member's PAN, to stay within thresholds and spread any TCS. It is legal, ordinary planning — and on a multi-year degree it is worth doing deliberately rather than by accident.
The money is the part most families arrange last and worry about most. Handled well — loan-funded to strip the TCS, sent at a real exchange rate, with the credit reclaimed at tax time — it is also the part where a careful family can save a year's living costs without touching the degree itself. (The wider picture: our overview of financing a foreign degree and the lender-by-lender loan guide.)
Where to get it
Starting points, not endorsements — compare the exchange rate and charges yourself before you transfer. Where Diaspora Dreams adds a partner link, any commission comes at no extra cost to you and never shapes our reporting.
- Before a large transfer, compare the rate. Check a specialist service such as Wise or BookMyForex against your bank's telegraphic-transfer rate. On a tuition-sized payment the gap can run to tens of thousands of rupees.
- Route fees through the loan account where you can — it is the cleanest way to pay zero TCS on the remittance.
- Keep the paperwork — the loan sanction letter and university invoice are what secure the education rate and the 0% TCS; the TCS itself is reclaimable at tax time.
Rules, rates and thresholds cited are as reported in 2026 and change often; this is general information, not tax or financial advice. Confirm current requirements with your bank or a qualified adviser before remitting.
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