Union Budget 2026: Big Relief for Study Abroad Aspirants as TCS Slashes to 2% New Delhi | February 4, 2026 — In a major boost for the dre...
Union Budget 2026: Big Relief for Study Abroad Aspirants as TCS Slashes to 2%
New Delhi | February 4, 2026 — In a major boost for the dreams of thousands of Indian students, the Union Budget 2026 has introduced a significant reduction in the Tax Collected at Source (TCS) for foreign education remittances. Finance Minister Nirmala Sitharaman announced that the TCS rate under the Liberalised Remittance Scheme (LRS) for education and medical purposes will be slashed from 5% to 2% for amounts exceeding ₹10 lakh.
This move is particularly impactful for medical aspirants heading to countries like Russia, Georgia, and Germany, where large upfront payments for tuition fees and mandatory "blocked accounts" often create a heavy initial financial burden.
📉 The Math: How Much Do You Save?
Under the old rules, a family remitting funds for an MBBS program abroad faced a high upfront tax "lock-in." The new 2% rate significantly improves liquidity:
| Remittance Amount | Old TCS (5% > ₹10L) | New TCS (2% > ₹10L) | Upfront Savings |
| ₹15 Lakh | ₹25,000 | ₹10,000 | ₹15,000 |
| ₹25 Lakh | ₹75,000 | ₹30,000 | ₹45,000 |
| ₹40 Lakh | ₹1,50,000 | ₹60,000 | ₹90,000 |
Key Note: Remember that TCS is not an extra tax. It is an advance tax that you can claim as a refund or adjust against your final income tax liability when filing your ITR. However, the reduction to 2% ensures that your hard-earned money isn't "blocked" with the government for months during the admission process.
🌍 Impact on MBBS in Russia & Europe
For students targeting Russia or Europe, where the total first-year cost (including airfare, visa, and fees) often crosses the ₹10 lakh threshold, this change is a "game-changer."
MBBS in Russia: With the ruble-rupee fluctuations, the lower TCS helps families manage the volatile costs of semester fees more effectively.
Germany Blocked Accounts: Students heading to Germany must now show proof of roughly ₹12 lakh in a blocked account. Previously, this transfer alone triggered a 5% TCS; now, it will attract only a 2% rate on the amount above ₹10 lakh.
✅ Who Benefits Most?
Self-Funded Students: While remittances funded via education loans (from specified banks) already enjoyed a lower/zero TCS rate since last year, this Budget specifically targets families using personal savings.
Medical Patients: The same relief applies to those seeking specialized medical treatment overseas.
💡 Expert Advice for Families
Education consultants in areas like Lajpat Nagar are advising parents to plan their remittances carefully. "The reduction from 5% to 2% is a practical move that acknowledges the rising cost of global education," says a senior counselor at GPC WORLD. "It allows parents to keep more cash in hand for immediate expenses like student insurance, flight tickets, and initial settling-in costs."
The new rules are set to take effect from April 1, 2026.
