0% TCS on Overseas Education Loans as per Union Budget 2025

Key Highlights

- No Tax Collected at Source (TCS) on remittances made through Overseas Education Loans.

- TCS exemption limit raised from Rs.7 lakhs to Rs.10 lakhs under the LRS scheme.

- 5% TCS to continue on self-funded education above Rs.10 lakhs.

- New TCS rules in effect from April 1, 2025, as per Union Budget 2025.

In an important update, the Union Budget 2025 has announced a significant revision to the Tax Collected at Source (TCS) regulations that provides relief to Indian students who are planning for higher studies abroad. These changes will come into effect from April 1, 2025, and aim to ease the financial pressure on families funding international education.

0% TCS on Overseas Education Loans

One of the most student-friendly changes is the complete removal of TCS on foreign remittance for education abroad made through verified education loans from recognized financial institutions. Previously, students taking education loans had to pay a 0.5% TCS on overseas remittances exceeding Rs.7 lakh, adding to their overall expenses. This provision has now been withdrawn, bringing the TCS rate down to 0% for all loan-based remittances, regardless of the amount.

Higher Exemption Limit for Remittances

The government has also increased the TCS exemption limit under the Liberalized Remittance Scheme (LRS) from Rs.7 lakhs to Rs.10 lakhs per financial year. This unified threshold applies to all types of overseas remittances, whether for overseas education, medical treatment, travel, or other purposes.

If the education expenses are self-funded or funded through sources not eligible for education loan tax benefits under Section 80E, TCS will be charged at 0% for remittances up to Rs.10 lakh and 5% for amounts exceeding Rs.10 lakh

Advantage of Overseas Education Loans over Self-Funding

This change highlights the benefits of taking an education loan for overseas studies rather than self-funding. Here’s a brief overview of the benefits one can get

Overseas Education Loan	Self-funding
0% TCS regardless of amount	5% on remittances exceeding Rs.10 lakhs
EMI-free moratorium during study period	Full amount required upfront
Eligible for tax deductions under Section 80E	Not eligible for tax benefits
Supports Faster Visa Approval	May reduce visa chances due to financial strain
Helps retain savings and manage expenses better	Depletes personal savings immediately

Implementation Details

TCS on education loan new rules have been applied from April 1, 2025, with the start of the new financial year. All authorized dealers (AD I and AD II) are expected to implement these system-level changes from midnight of March 31, 2025.

With this budget-friendly reform, thousands of Indian students aspiring to study abroad can reduce unnecessary tax payments by choosing an overseas education loan instead of self-funding. Beyond the TCS waiver, education loans bring structured financial planning, easier visa approvals, and long-term benefits like tax deductions under Section 80E.

Those who wish to know more about this development can approach Élan Loan experts. At Élan Overseas Education Loans, our experts guide you through every step—from understanding the different education loan eligibility criteria to choosing the right lender that aligns with your study goals. We simplify the process so you can focus on your education dreams.