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Planning a Foreign Trip or Sending Money Abroad? Here's How Much TCS You’re Paying

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Discover the essentials of Tax Collected at Source (TCS) for foreign transactions. We discuss how TCS could impact your overseas education, travel, and other international expenses, outlining the key thresholds and rates. Whether you’re spending via loans or self-funding, we clarify when TCS is charged and how you can claim it back on tax returns. This could help us in planning your expenditure ahead .


Are you planning a dream vacation or considering studying abroad? Maybe you’re looking to support a family member’s overseas education or medical procedures. Whatever the case, there’s an important update on TCS  you should be aware of before you start transferring money abroad or booking that international package tour.

Keep That 7 Lakh Figure in Mind

If you send less than INR 7 lakh abroad in a year, you won’t have to worry about extra tax. This exemption isn’t in the income tax law, but based on press releases and clarifications. you can breathe easily. The tax won’t kick in until you cross that amount. But once you do, tax applies differently over INR 7 lakh in spending.

TCS Rates Based on Purpose of Remittance

The government has categorized remittances into three buckets, each with its tax rate beyond the INR 7 lakh threshold:

1. Educational Payments Financed by a Loan

A concessional TCS rate of 0.5% encourages higher studies financed through loans.
Personal Scenario: Sai’s Study Loan for Her Master’s in the UK

Sai was accepted into a master’s program in the UK, with the total expenses, including tuition and living expenses, amounting to INR 16 lakh. To finance this, Sai’s family took out an education loan. This is how the Tax Collected at Source (TCS) was involved in their situation.

For the first INR 7 lakh, there is no TCS.

The remaining INR 9 lakh attracts a TCS of 0.5% (as applicable on an education loan).

0.5% of INR 9 lakh = INR 4,500

Sai’s family will pay INR 4,500 as TCS, which they can claim as a tax credit when filing income tax returns.

2. Self-Funded Education and Medical Treatment

A TCS of 5% aims to moderate non-loan-funded education and urgent medical expenses.

Personal Scenario: Anil’s Self-Funded MBA in Australia

Anil decides to self-fund his MBA in Australia, costing INR 18 lakh. He uses his savings for this purpose. Here’s how TCS comes into play:

TCS of 5% on the remaining INR 11 lakh(as applicable on a self-funded education).5% of INR 11 lakh = INR 55,000

Anil will incur a TCS of INR 55,000, which, like Sai’s case, is creditable against his income tax.

Personal Scenario: Neha’s Medical Treatment in Germany

Neha needs a medical procedure in Germany, which costs INR 13 lakh. Since it’s a health-related expense, the TCS rate after the threshold is the same as for self-funded education.

The next INR6 lakh attracts a TCS of 5%. 


5% of INR 6 lakh = INR 30,000

Neha’s family pays INR 30,000 as TCS, which they can offset against their taxes.

Everything Else

This is the catch-all category, whether it’s a gift, investment, or buying property, attracting a TCS of 20% if it goes beyond 7 lakhs.
Purpose of Remittance
Up to 7 lakhs
Above7 lakhsTCS Rate
Education (loan financed)0.5%
Education/Medical (non-loan)5%
Other Purposes (Investment, Gifts)
✔ (Not for online transfers )20%
Overseas Tour
5% (Up to 7 lakhs)
20%(Above 7 lakhs)
Travel (without package )20 %

Debit card payments

This is incredibly convenient for short trips or small purchases. However, as mentioned above, if your international spending exceeds INR 7 lakh in a financial year, TCS will come into play. Here’s the catch: When you use your debit card for international purchases, you won’t be charged an extra tax (TCS) until you spend more than ₹7 lakh, Even if this threshold is crossed, there is no financial loss incurred, as individuals can claim credit for this TCS amount when filing their annual income tax returns.

Impact of Changes for Credit Card Payments

Credit card payments for overseas spends have been spared from the TCS net—for now. This could change, so staying updated on this front is wise, especially for those who frequently use their credit cards for foreign currency transactions. There are still other fees like foreign exchange charges and hidden costs to consider.

Credit Against Tax Liability

It’s crucial to understand that TCS is not an additional tax but a part of your income tax. When you file your income tax returns, you can claim a credit for the TCS amount paid at the time of spending.


As you engage with the world through education, travel, or investment, it’s essential to incorporate the Tax Collection at Source (TCS) into your financial blueprint. This tax, while an upfront cost, is a prelude to your income tax and not an extra burden, as it can be claimed back. With a clear understanding of TCS, you’re empowered to pursue international spending with confidence.

Frequently Asked Questions

TCS is a tax collected when you spend money on international transactions like education or travel, adjustable against your income tax due.

TCS applies if your total remittance exceeds INR 7 lakh in a year, at 0.5% for education loans and 5% for self-funded education or medical expenses, 20% on travel and other purposes. 

Yes, you can claim a TCS refund if it exceeds your actual tax liability when you file your income tax returns.
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