Tax Collected at Source (TCS) is a type of tax where the seller collects a certain percentage of the transaction amount from the buyer and deposits it to the government.
What is TCS?
For foreign remittance transactions, TCS may be levied on you when you send money abroad from India.
It was announced that the TCS rate for foreign remittance would increase from 5% to 20% of the amount transacted starting October 2023. This has caused some panic for Indian students who would like to study in Germany and need a blocked account.
How Will the New TCS Rate Affect Blocked Account Opening?
Good news! The rate increase does not apply to educational remittances, and therefore, does not affect the blocked account needed for your German student visa.
The tax rate for Indian students coming to Germany for the purpose of studying remains at 5%.
Here is What You Need to Know
- Educational remittances under 7 lakh INR are exempt from TCS provided the amount was financed by an educational loan.
- For transactions above 7 lakh INR funded by an education loan, a TCS rate of 0.5% is applicable.
- Remittances above 7 lakh INR financed in any other way will face a TCS rate of 5%.
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