How to Get Tax Exemption on TCS When Studying Abroad
Here’s How To Get Tax Exemption On TCS When Going To Study Abroad
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Understanding TCS and Its Impact on Your Education Expenses
To navigate the process of obtaining tax exemption, it’s essential to first understand what TCS is and how it affects your education expenses. TCS is a form of tax levied by the Indian government on certain transactions, including overseas remittances made for educational purposes.
Currently, the rate of TCS applicable for education remittances is 5%. This means that if you transfer ₹10 lakh for your studies abroad, you will be charged ₹50,000 as TCS. While this can seem like an additional burden on top of your already hefty education expenses, there are provisions in place that allow you to claim a refund or exemption on this TCS amount.
Eligibility Criteria for Tax Exemption on TCS
Not every student studying abroad is eligible for tax exemption on TCS. To qualify, you need to meet certain criteria set by the Indian government. Here are the key requirements:
- Get admission to a recognised foreign educational institution: Ensure that the university or college you have been accepted to is recognised by the government of India or any appropriate authority.
- Satisfy income threshold limits: To claim tax exemption on TCS, your total income, including your parents’ income (if applicable), should be below the taxable limit specified by the Indian Income Tax Act.
- Fulfill course-related criteria: The course you are pursuing should lead to a graduate or postgraduate degree or diploma recognised by a foreign education board, university, or institution.
- Education Loan Source: If your source of funds is an education loan, you will only have to pay 0.5% tax.
Steps to Obtain Tax Exemption on TCS
Once you meet the above-mentioned eligibility criteria, you can proceed with the process of claiming tax exemption on TCS.
- Collect all required documents: Gather all necessary documents such as your admission letter, fee structure, mark sheets or transcripts, and bank statements showing the remittance made for education expenses.
- File your income tax return: As an Indian resident, it’s important to file your income tax return every year, even if your income is below the taxable limit. This step is crucial to establish your eligibility for tax exemption on TCS.
- Claim refund through income tax return: When filing your income tax return, you can claim a refund of the TCS amount paid for education remittances. Make sure to accurately fill in the details related to the TCS refund while filing your return.
- Keep track of communication with the Income Tax Department: It’s advisable to maintain records of any communication you have with the Income Tax Department regarding your claim for tax exemption on TCS. This will help in case of any future clarifications or disputes.
How Niyo Forex Cards Can Enhance Your Financial Experience Abroad
While the focus of this article is on obtaining tax exemption on TCS, it’s important to mention how Niyo cards can enhance your financial experience while studying abroad. Niyo offers a range of benefits specifically designed for international students like you
- Zero TCS on spends: With a Niyo card, you can make purchases abroad without incurring any TCS charges. This means more savings for you during your education journey.
- Zero forex markup: Niyo cards come with zero forex markup, ensuring that you get the best currency exchange rates while making transactions abroad.
- Free ISIC card: As a Niyo cardholder, you are eligible for a free International Student Identity Card (ISIC), offering discounts and benefits at various establishments worldwide.
Be sure to visit https://niyo.me/education_loan to speak to a loan counsellor and receive the best offer quickly.
Key Takeaways
Understanding TCS and its impact on your education expenses is crucial for Indian students going abroad to study.
To claim tax exemption on TCS, you must meet eligibility criteria set by the Indian government.
The benefits of the Niyo card to handle loan offers.
To ensure you have access to all these benefits and more, download the Niyo app today! Enjoy substantial savings with no forex markup and receive a complimentary ISIC card, a globally recognized digital student ID. Furthermore, the Niyo mobile app can assist you in optimizing your financial management while pursuing a master’s course abroad.
