Sending Money Abroad for Studies from Kolkata: LRS Limit, TCS at 0%, 5% or 20%, Documents and Tax Credit
Parents in Kolkata can send up to USD 2,50,000 per person per financial year abroad under the Liberalised Remittance Scheme (LRS) for a child’s education, including tuition, hostel and living expenses. Banks collect TCS on these remittances: nil if the money comes from an education loan from a bank or approved institution, and 5% on the amount above ₹10 lakh in a year if paid from own funds. Other remittances, such as gifts or investments, attract 20% above ₹10 lakh. TCS is not an extra tax; it can be claimed against your tax in the return or adjusted against TDS on salary. This guide covers the rules, documents and tax planning.
LRS and TCS at a glance
| Purpose | LRS limit | TCS (from 1 April 2025) |
|---|---|---|
| Education, funded by a loan from a specified financial institution | USD 2.5 lakh a year per person | Nil |
| Education, own funds | USD 2.5 lakh | 5% on the amount above ₹10 lakh a year |
| Medical treatment abroad | USD 2.5 lakh | 5% above ₹10 lakh |
| Overseas tour packages | USD 2.5 lakh | 5% up to ₹10 lakh, 20% above (check current rates) |
| Gifts, investments, maintenance of relatives | USD 2.5 lakh | 20% above ₹10 lakh |
The ₹10 lakh threshold is per person per financial year across all banks.
How to pay
- Tuition and hostel fees: pay directly to the university’s account using the bank’s outward remittance service, with the invoice or fee letter.
- Living expenses: remit to the student’s own bank account abroad, or load a forex card.
- Documents: Form A2, PAN, admission letter and fee invoice, student’s passport and visa, and loan sanction letter if applicable.
- Choose the remitter wisely: each parent has a separate LRS limit and ₹10 lakh TCS threshold, which helps when costs are high.
Claiming the TCS back
- TCS appears in Form 26AS and AIS of the person who made the remittance.
- Claim it in the income tax return; any excess is refunded.
- Salaried parents can ask the employer to adjust TCS against monthly TDS, improving cash flow.
Education loan interest deduction
Under the old tax regime, interest on an education loan for higher studies of yourself, your spouse or children is fully deductible for up to 8 years. There is no limit on the amount. The deduction is not available under the new regime.
The student’s tax and FEMA status
- A student who leaves India for studies and stays abroad for most of the year generally becomes a non-resident for tax and under FEMA. Their savings account in India should be converted to an NRO account.
- Income earned abroad from part-time work is not taxable in India if they are non-resident.
- When the student returns, residential status changes again; plan bank accounts and any foreign assets accordingly.
Common mistakes
- Splitting remittances across many banks to “avoid” TCS. The threshold is per person, and banks report every remittance.
- Remitting for education but using it for property or investments abroad.
- Not keeping university invoices and loan letters, which banks may ask for later.
Example: a Kolkata family’s first year abroad
Ishita leaves for a master’s in the UK. Fees are ₹28 lakh and living costs ₹12 lakh for the year. Her father pays ₹25 lakh from an education loan from a bank (no TCS) and ₹15 lakh from savings. TCS at 5% applies only on the ₹5 lakh above the ₹10 lakh threshold on the self-funded part, so ₹25,000 is collected, which he claims back in his return. If her mother had made the ₹15 lakh remittance instead, her own ₹10 lakh threshold would apply separately.
Practical points with Kolkata banks
- Ask the bank in advance for its LRS documentation list; some want the university’s fee invoice and bank details on letterhead.
- Compare exchange rates and charges across banks and forex providers; a small margin difference matters on large fees.
- For recurring living expenses, set up a regular remittance schedule to the student’s foreign account.
- Keep the remittance advices and Form A2 copies for TCS credit and any future queries.
When the student starts working abroad
Once the student takes up a job abroad, parents’ remittances are gifts or maintenance, with TCS at 20% above ₹10 lakh. The student should update KYC with Indian banks, convert accounts to NRO or NRE, and understand Indian tax on any Indian income.
Quick checklist for parents
- Decide which parent remits, to use both TCS thresholds where helpful.
- Use the education loan for fees where possible (nil TCS).
- Pay fees directly to the university with the invoice.
- Keep Form A2, invoices and remittance advices.
- Claim TCS in your return or through your employer.
FAQs
How much money can I send abroad for my child’s education?
Up to USD 2,50,000 per person per financial year under LRS.
Is TCS charged on education remittances?
Nil if funded by an education loan from a specified institution; 5% above ₹10 lakh a year otherwise.
Can I get the TCS back?
Yes, as a credit in your income tax return, or through adjustment with your employer’s TDS.
Is TCS charged on remittances to a student funded by a loan from an NBFC?
Nil TCS applies to education remittances funded by loans from specified financial institutions, which include banks and notified NBFCs; check with your bank.
Can a student under 18 remit under LRS?
Remittances for minors are made by the parent or guardian, who signs the forms.
TAXAJ helps Kolkata families with LRS remittances, TCS credit and tax planning for studies abroad. Talk to our Kolkata team.
Last updated 11 November 2026. Sources: RBI Master Direction on the Liberalised Remittance Scheme; Income-tax law on TCS on foreign remittances as amended by the Finance Act, 2025; provisions on deduction for education loan interest and residential status. Check current TCS rates for tour packages. General information only.
