Good news for Indian parents. Nirmala Sitharaman has been quite generous to parents who take out loans to send their kids overseas for education. However, those who are making sacrifices—like cutting back on meals or selling their homes—haven’t seen their needs addressed in the latest budget. In the 2025-26 budget, the Indian government has removed the TCS, or tax collected at source, on college fees for students studying abroad with loans. Previously, there was a 0.5% tax on any amount over seven lakh rupees sent for college fees in a year.
Also Read
On the flip side, if parents send money abroad without a loan, the 20% TCS will still apply. While those taking loans for their children’s education abroad have received some relief, parents who are using their savings or selling assets like property or jewelry are still facing the same 20% TCS on college fees. The good news is that the limit for TCS on fees paid to foreign colleges without a loan has been raised from seven lakh to ten lakh rupees.
Experts believe that these parents deserve some relief too, especially considering their financial situations. Many of them avoid loans to escape high-interest rates and end up sacrificing their own futures, even dipping into their provident funds. In fact, their financial struggles can be worse than those of parents who take out loans.
This move by the Finance Minister is seen as a step towards realizing the aspirations of middle-class families who want to provide their children with better educational opportunities abroad. It’s likely that more parents will start dreaming of sending their kids overseas for studies.