Sending money abroad for education? Watch out for these errors to avoid 20% TCS

economictimes.indiatimes.com:

TCS will not apply to education expenses incurred abroad. But parents must be careful about the fine details of TCS while remitting money for overseas education. In case of any carelessness, they would end up paying a hefty amount of TCS on their spending.

ET Online explains. How much money can parents send overseas under LRS in a year? The Liberalised Remittance Scheme (LRS) allows parents to send money to their kids studying overseas to meet various expenses related to the course. Under LRS, the parents can send money of up to Rs $250,000 during a financial year. In case, parents want to remit more money than the prescribed limit, they need to take permission from the Reserve Bank of India.How will TCS apply for remitting money for education abroad? Under LRS, parents can send up to Rs 7 lakh per year without being subject to TCS for education-related expenses.

If remittances for foreign education cross the threshold of Rs 7 lakh and are financed by a loan from any approved financial institution, a TCS of 0.05 per cent will be levied. Any remittance beyond Rs 7 lakh for education purposes, not obtained through a loan, will attract a TCS of 5 per cent. Let’s say you have remitted Rs 9,00,000 abroad for education purposes under LRS in a financial year.

A TCS of 5 per cent will be charged on amounts exceeding Rs 7 lakhs if the money has not been obtained through an education loan. So, the amount of TCS, in this case, will be {(9,00,000-7,00,000)*5/100}=Rs 10,000. These are the existing rates of TCS for sending money through LRS for a child's education.