The Regional Congress Committee (MRCC) has written a letter to Union Finance Minister Nirmala Sitharaman addressing the issue of the tax collected at source (TCS) imposed on families sending education expenses to students studying abroad under the Liberalised Remittance Scheme (LRS) by the Reserve Bank of India. The MRCC has requested a reduction in the TCS rate from 5% to 2% and an increase in the transaction limit from Rs 7,00,000 to Rs 10,00,000.
The current regulations impose a 5% TCS on transactions exceeding Rs 7,00,000. However, Varsha Gaikwad, the President of MRCC, argues that many families lack the financial security to pay for education expenses upfront. As a result, they often have to resort to pawning jewelry or mortgaging their houses to acquire the necessary funds.
Gaikwad points out that students typically require Rs 25,00,000 for education abroad. For instance, if a family intends to send Rs 25,00,000 for education expenses, they would incur a substantial TCS fee of Rs 90,000, which places a significant burden on their income. This financial burden on students and their families can have a negative impact on their ability to pursue higher education abroad.
By reducing the TCS rate to 2% and increasing the transaction limit to Rs 10,00,000, Gaikwad believes that the financial burden on students and their families can be alleviated. The TCS amount often acts as a decisive factor for many families wishing to support their children’s higher education abroad, and these revisions would provide much-needed relief.
The MRCC’s letter to the Finance Minister highlights the importance of considering the financial realities faced by families when imposing taxes on education expenses sent abroad. It emphasizes the need to support students and their families in accessing quality education without placing undue financial strain on them.
In summary, the MRCC has requested a reduction in the TCS rate and an increase in the transaction limit for families sending education expenses abroad. These changes aim to alleviate the financial burden on students and their families and ensure that financial constraints do not hinder access to higher education. It remains to be seen how the Finance Minister will respond to this request and whether any revisions will be made to the existing regulations.