Sending money abroad for study — the LRS guide

The Liberalised Remittance Scheme is the RBI framework under which a resident individual may send money abroad without any prior approval. The RBI Master Direction states that Authorised Dealers "may freely allow remittances by resident individuals up to USD 2,50,000 per Financial Year (April-March)" for permitted transactions. "Studies abroad" is a permitted purpose.

• Who it covers: all resident individuals, including minors. Where the remitter is a minor, the LRS declaration (Form A2) must be countersigned by the natural guardian. It is not available to corporates, partnership firms, HUFs or trusts.
• How the limit works: the USD 250,000 belongs to the individual, not to an account or a bank, and the Master Direction confirms it subsumes current account transactions. You declare the LRS remittances you have already made in the financial year when you buy the foreign exchange. Once the limit is exhausted, no further LRS remittance is permitted that year. It resets on 1 April.
• Number of transactions: not restricted. Only the annual aggregate matters, so paying tuition in instalments is fine.
• Each family member has their own limit. The Master Direction permits remittances to be "consolidated in respect of family members subject to individual family members complying with its terms and conditions" — so both parents can each remit toward the same child's fees. Clubbing is not permitted for capital account transactions such as opening an overseas bank account or investing, where the other family members are not co-owners.

Education can exceed USD 250,000

This is the provision most families do not know about. For studies abroad, banks "may release foreign exchange up to USD 2,50,000... without insisting on any estimate", and the Master Direction goes further: AD Category I and AD Category II banks "may allow remittances (without seeking prior approval of the Reserve Bank of India) exceeding USD 2,50,000 based on the estimate received from the institution abroad."

In plain terms: if the university's own cost estimate for tuition and living expenses is higher than USD 250,000, your bank can remit the higher amount on the strength of that document. No RBI application is needed. The same applies to medical treatment abroad.

Two documentation requirements are absolute. You must furnish Form A2 to buy the foreign exchange, and the Master Direction states that "it is mandatory for the resident individual to provide his/her Permanent Account Number (PAN) to make remittance under the Scheme."

TCS on foreign remittances is governed by Section 394(1) of the Income-tax Act, 2025 (the successor to Section 206C of the 1961 Act), as amended by the Finance Act, 2026 (Act No. 4 of 2026) with effect from 1 April 2026. The Income Tax Department's own text of Section 394 carries the amendment footnote: "Sub. for 5% by Act No. 4 of 2026, w.e.f. 1-4-2026."

Serial No. 7 of the Section 394 table covers "Remittance under the Liberalised Remittance Scheme of an amount or aggregate of the amounts exceeding ten lakh rupees", collected by the Authorised dealer, at:

• 2% — "for purposes of education or medical treatment"
• 20% — "for purposes other than education or medical treatment"

Separately, Section 394(4)(b) provides that no tax shall be collected "if the amount being remitted out is a loan obtained from any financial institution as defined in section 129(3)(b), for the purpose of pursuing any education."

So, for an education remittance

• Funded by an education loan from a financial institution: NIL TCS, with no threshold at all.
• Funded from own savings, sale of assets, gifts or any other source: NIL up to ₹10 lakh in the financial year, then 2% on the amount above ₹10 lakh.
• Anything remitted for a purpose other than education or medical treatment: 20% above the same ₹10 lakh.
• An "overseas tour programme package" is a different entry (Sl. No. 8) — 2%, with no threshold, from the first rupee, and it is collected by the seller of the package rather than by your bank. If you buy a packaged trip for the drop-off, that is taxed separately from your education remittance.

The rate applies only to the excess

This is the single most misread point. Banks do not charge TCS on the whole remittance — Standard Chartered India, for example, publishes the education rate as "Nil up to ₹10 lakhs, 2% above ₹10 lakhs" with effect from 1 April 2026. On that basis, a parent self-funding ₹28 lakh of tuition in a year with no other LRS spending pays 2% on ₹18 lakh — ₹36,000, not ₹56,000.

On ₹35 lakh, it is 2% of ₹25 lakh = ₹50,000 (it would have been ₹1,25,000 at the 5% rate that applied until 31 March 2026). Because the new Section 394 states the rate against a receipt "exceeding ten lakh rupees" rather than repeating the old "in excess of" wording, ask your own bank to confirm the computation in writing before a large transfer.

Three things to know about the ₹10 lakh threshold

• It is an annual figure, not a per-transaction allowance — several transfers in the same financial year are added together. Your bank will ask you to declare your cumulative LRS remittances for the year, including those made through other banks, and will apply the threshold to that declared position. Do not assume that using a second bank gives you a second ₹10 lakh: ask each bank in writing how it will treat remittances you have already made elsewhere before you rely on it.
• The threshold sits in a single table entry that covers LRS remittances whether or not they are for education — "an amount or aggregate of the amounts exceeding ten lakh rupees" — with a different rate for each purpose. If you have already remitted this year for another purpose, ask your bank how much of the threshold it treats as remaining before you send the fees.
• It resets on 1 April. Fees genuinely falling due in two different financial years each get their own ₹10 lakh.

PAN must be operative

A higher rate of TCS applies where PAN is not furnished or where the PAN is inoperative because it is not linked to Aadhaar — banks state this explicitly in their LRS notices. Confirm the exact rate with your bank if this applies to you; the practical answer is simply to check that your PAN is linked and operative before you remit. Note that the separate higher-rate rule for non-filers of income tax returns (Section 206CCA of the Income-tax Act, 1961) was omitted by the Finance Act, 2025 with effect from 1 April 2025 and no longer applies.

GST is not charged on the TCS amount itself, but GST does apply to the bank's currency-conversion and remittance service charges. Ask for the all-in cost, not just the exchange rate.

Between two families sending the same ₹40 lakh, one pays ₹60,000 in TCS and the other pays nothing. The only difference is the source of the money.

Section 394(4)(b) exempts a remittance where the amount "is a loan obtained from any financial institution as defined in section 129(3)(b), for the purpose of pursuing any education". Section 129 of the Income-tax Act, 2025 is the education-loan interest deduction (the former Section 80E), and it defines a financial institution as a banking company to which the Banking Regulation Act, 1949 applies, or any other financial institution notified by the Central Government.

• Qualifies: a loan from a scheduled bank, or from an NBFC/financial institution that has been notified by the Central Government for this purpose.
• Does not qualify: money borrowed from a relative or a friend, an unsecured personal loan, a gold loan, a top-up on a home loan, or your own savings — however genuinely they are being used for education. These take the normal 2%-above-₹10-lakh treatment.
• Before you sign: if you are considering a non-bank lender, ask the lender in writing whether it is a notified financial institution under Section 129(3)(b). The same answer also determines whether the interest qualifies for the Section 129 deduction.

The remittance has to actually come out of the loan

The exemption attaches to the money, not to the fact that a loan exists somewhere. Practical consequences:

• If the loan is sanctioned but you pay the first instalment from savings and reimburse yourself after disbursement, that first tranche does not get the nil rate.
• If a payment is part loan, part own funds, only the loan-funded portion is exempt. The self-funded portion counts toward — and is taxed above — the ₹10 lakh threshold in the normal way.
• Your bank will want to see the sanction letter, evidence of disbursement, and ideally the remittance being made from the loan account or an account the disbursement landed in. Sequence the disbursement before the fee deadline, not after.

How this changed

Loan-funded education remittances were taxed at 0.5% above ₹7 lakh until 31 March 2025. Those 2025 changes were made by the Finance Act, 2025 to Section 206C(1G) of the Income-tax Act, 1961, which governed remittances up to 31 March 2026. Section 394 of the Income-tax Act, 2025 applies to remittances made on or after 1 April 2026. The Finance Act, 2025 removed the levy entirely and raised the general threshold to ₹10 lakh with effect from 1 April 2025, so if you are reading older guidance quoting 0.5% or ₹7 lakh, it is out of date.

Families routinely treat TCS as a fee. It is not. It is an advance deposit of income tax against the remitter's PAN, and it is set off against that person's tax liability for the year. If the liability is lower, the balance is refunded when your return is processed. Do not plan cash flow around the timing of that refund.

• Where it appears: in the remitter's Form 26AS and Annual Information Statement (AIS) on the income tax portal, once the bank files its quarterly TCS return.
• The certificate: the bank issues a quarterly TCS certificate — Form 133, the former Form 27D, issued under Section 395(4)(a) of the Income-tax Act, 2025. Banks typically email it to your registered address. Keep every quarter's certificate.
• Claiming it: enter the TCS in your income tax return for the relevant year. It reduces tax payable rupee for rupee; excess is refunded.
• If you are salaried, do not wait for the refund. Report the TCS to your employer using Form 122 (which replaced Forms 12B and 12BAA, under Section 392(4)(a) of the Income-tax Act, 2025). Your employer then reduces the TDS on your salary for the rest of the year, so the money comes back through monthly cash flow instead of sitting with the government until your refund is processed.

Whose PAN the credit lands on — decide this before you remit

The credit belongs to the person who makes the remittance. If the father remits, the TCS is in the father's 26AS and only the father can use it. This has two practical consequences:

• Remit in the name of the family member who actually has taxable income. TCS in the name of a homemaker parent or a student with no income becomes a refund claim requiring an ITR to be filed, not an in-year set-off.
• Never route the remittance through a friend's or an extended relative's account to "save" limit. It consumes their LRS limit and parks your tax credit on their PAN.
• Where money is remitted in a minor's name and the minor's income is clubbed with a parent's (Section 64(1A) of the Income-tax Act, 1961, now Section 99 of the Income-tax Act, 2025), the law was amended by the Finance (No. 2) Act, 2024 with effect from 1 January 2025 to allow the parent to claim the TCS credit, on the conditions notified in Rule 37-I. Outside that clubbing situation, credit follows the collectee.

If the transfer is cancelled

Banks state plainly that TCS, once collected and deposited, cannot be refunded by the bank even if the remittance is returned or reversed. Your only route is to claim it in your income tax return. Get the beneficiary details right the first time.

These are the forms families are most often frightened into paying for unnecessarily.

Form 15CA (the remitter's declaration) and Form 15CB (an accountant's certificate) were renumbered as Form 145 and Form 146 with effect from 1 April 2026 under the Income-tax Act, 2025 framework. The substance did not change — only the numbers. Their purpose is to police remittances to non-residents that are chargeable to tax in India.

• The Income Tax Department's own Form 145 FAQ lists, as the first exemption, remittances "made by an individual" that do "not require prior approval of RBI i.e. payments by an individual under Liberalised Remittance Scheme". A parent or student paying university fees under LRS is exempt for that reason alone — you do not need to argue about whether the fee is chargeable to tax in India. The governing rule is Rule 220 of the Income-tax Rules, 2026, the successor to Rule 37BB. For an ordinary fee payment, no Form 145 or Form 146 is required.
• The accountant's certificate route (Form 146) is aimed at taxable payments to non-residents above ₹5 lakh in the tax year: specifically, Form 146 is needed only where the remittance is chargeable to tax and exceeds ₹5 lakh during the tax year (Part C of Form 145). Typical examples are certain service or royalty payments by a business. It is not the standard path for a student fee transfer.
• Banks sometimes ask for the form anyway as internal compliance. That is the bank's policy, not a statutory demand — ask them to point to the requirement, and be prepared to comply if they insist rather than lose the payment window.
• Section 394(5) provides that TCS is not collected where the buyer — you, the remitter — was liable to deduct TDS on the same payment under another provision and has deducted it. In that case the bank will want a declaration plus the tax challan. This applies to a narrow set of cases, not to normal fee payments.

If an agent offers to "handle your 15CA/15CB" for a fee on a straightforward education remittance, ask them which provision makes it applicable to you before paying anything.

LRS is available only to a resident individual. A parent, guardian or the student (while still resident in India) can be the remitter. In practice, most fee payments are made by a parent.

• Parents and guardians: a parent may remit for a child's education under their own USD 250,000 limit. Both parents can each remit — remittances "can be consolidated in respect of family members", provided each family member independently complies with the Scheme.
• Minors: a minor is eligible under LRS, but the Form A2 declaration must be countersigned by the natural guardian.
• Maintenance and living expenses: a resident individual may remit towards maintenance of relatives abroad, "relative" being as defined in Section 2(77) of the Companies Act, 2013 (which covers members of a Hindu Undivided Family, husband and wife, and a prescribed list including parents, step-parents, children, son's wife, daughter's husband, brother and sister). Living costs for a son or daughter studying abroad fall squarely inside this. Note this is not an extra allowance — it sits within your USD 250,000 LRS limit, which subsumes current account transactions.
• The student's own status: under FEMA, a student who goes abroad for studies is treated as a non-resident from the time of departure (A.P. (DIR Series) Circular No. 45 dated 8 December 2003). This does not obstruct anything — parents remit to the student's overseas account as an ordinary LRS remittance — but it does mean the student's Indian accounts should be redesignated (NRO/NRE) in the normal way.
• Prohibited destinations: the Scheme is not available for capital account remittances to countries identified by the Financial Action Task Force as non-co-operative countries and territories. Separately, remittances may not be made directly or indirectly to individuals and entities identified as posing a significant risk of committing acts of terrorism, as advised by the Reserve Bank to banks.

Where the remitter is not the student, banks will ask for proof of relationship. Keep a copy of the student's birth certificate or a passport showing parents' names with your remittance file — it is asked for repeatedly.

Requirements vary slightly between banks, but the core file is consistent. Assemble it once and reuse it for every instalment.

Always

• Form A2 and the LRS declaration, stating your cumulative LRS remittances so far in the financial year
• PAN of the remitter — mandatory under the Scheme, and it must be operative (Aadhaar-linked)
• Offer / admission letter from the university
• Fee demand note or invoice showing the amount, the student ID, and the university's bank details (SWIFT/BIC, IBAN or routing and account number, beneficiary name exactly as the university states it)
• Student's passport, and visa / CAS / I-20 / CoE where already issued
• Proof of relationship if the remitter is not the student

If the remittance exceeds USD 250,000

• The institution's own cost estimate — tuition plus living expenses. This is what allows the bank to release more than the standard limit for studies without RBI approval.

If it is loan-funded

• Loan sanction letter naming the student and the course
• Evidence of disbursement and the loan account statement, so the bank can record the remittance as being made out of the loan and apply nil TCS

Fund the account for more than the fee

Banks will reject the transaction for insufficient balance if the account does not cover the remittance plus TCS, the currency-conversion margin, the bank's remittance charge, GST on those charges, and correspondent-bank charges deducted en route. Ask specifically whether charges are "OUR" (you pay them, so the university receives the full fee) or "SHA/BEN" — a shortfall of a few hundred dollars at the university's end is a common and avoidable problem.

Then keep the paperwork

• The SWIFT copy / foreign inward remittance advice for each transfer
• The quarterly Form 133 TCS certificate
• A running tally of your LRS usage for the year, and your bank's written confirmation of the cumulative position it is applying for TCS

• Sequence the loan before the first payment. Paying instalment one from savings while the sanction is pending costs you the nil rate on that tranche permanently. It cannot be retro-fitted.
• Do not plan around the threshold. The ₹10 lakh is an annual figure, not a per-transfer allowance, and international debit-card and forex-card spending is a remittance under LRS too. Your bank applies the threshold to the cumulative LRS position you declare. Ask your bank for that position in writing before a large payment rather than assuming how multiple transfers or multiple banks will be treated.
• International credit card use while overseas has not been brought under LRS, by a Ministry of Finance clarification of 28 June 2023, and banks accordingly do not collect TCS on it. This is a deferral, not a permanent exemption — verify the position at the time you travel.
• A tour package is not an education remittance. Buying a packaged trip attracts 2% from the first rupee with no threshold, collected by the seller. Booking flights and accommodation separately is a different tax treatment from buying a "package".
• Do not use informal channels. Sending money through a hawala-style operator or an unregulated "agent" to avoid TCS is a FEMA contravention with penalties that dwarf the tax. TCS is refundable; a FEMA penalty is not.
• Match the remitter to the taxpayer. If one parent has the income and the other has the savings, think about who signs the Form A2 — the tax credit follows the remitter.
• Recheck the rate each financial year. This provision has been amended in three consecutive Budgets. Before a large transfer, confirm the current rate with your bank in writing.

Nothing here is a substitute for advice from your chartered accountant on your own tax position. Where a figure matters to a six-figure decision, ask your bank to confirm it in writing before you remit.