However, as of June 30, 2023, the Central government has clarified that remittances for education including the following will not attract a higher TCS
- Remittance for Travel: This covers the purchase of tickets for a student's travel between India and the country of education.
- Tuition and Other Fees: Payments made to the educational institute for tuition and other academic fees.
- Day-to-Day Expenses: This encompasses expenses for food, accommodation, local transport, health services, and other daily needs.
However, proving the education link can be challenging for expenses like accommodation. For instance, students living off-campus or in shared apartments may find it difficult to establish the educational purpose of these expenses.
Transactions conducted through two bank accounts and through debit and forex cards also fall under the LRS scheme. However, there is a need for further clarification on how TCS will be applied to money remitted abroad via forex cards.
To mitigate the impact of the higher TCS, parents can consider:
- Use International Cards: Opt for international cards with zero forex markup and no TCS for expenses up to Rs. 7 lakhs per financial year. This can help you save on international transaction fees and ATM withdrawal charges.
- Keep Transaction Records: Maintain a record of your financial transactions related to education expenses abroad. This documentation will be valuable for filing income tax returns and complying with TCS requirements.
- Correct LRS Code: Ensure that you use the correct Liberalised Remittance Scheme (LRS) code when making remittances for education. Accurate categorization is crucial to avoid unnecessary TCS.
- Be Prepared for ITR: Be ready to file for Tax Collection at Source (TCS) when filing your income tax returns (ITR). Familiarize yourself with the necessary forms and documents to complete the process accurately.
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