By Mr. Gaurav Batra, CEO & Founder, Infinite Group 

The unveiling of Budget 2024 by Union Finance Minister Nirmala Sitharaman has sent ripples through India’s education sector, particularly for the 1,335,878 students pursuing higher education abroad. With a substantial allocation of Rs. 1.48 lakh crore for education, employment, and skilling, the budget promises sweeping changes. However, for those eyeing international education, a pressing question emerges: Does this budget offer relief or add to the financial burden of studying abroad?

A New Dawn for Domestic Education

At first glance, the budget paints a rosy picture for students planning to study in India. The government’s announcement of financial assistance of up to Rs 10 lakh for higher education in domestic institutions comes as a welcome surprise. This support, delivered through e-vouchers to one lakh students annually, coupled with a 3% interest subsidy on loan amounts, aims to make quality education more accessible and affordable.

For youths not covered by existing government schemes, this financial assistance opens new doors. The e-voucher system, offering an interest subvention of the loan amount, promises to ease the financial burden on students and parents alike. This move could potentially stem the tide of students looking abroad for quality education due to financial constraints at home.

Further bolstering domestic education, the budget for higher education has seen a 7.68% increase to Rs 47,619 crore for 2024-25. While this figure falls short of the revised estimate of Rs. 57,244 crore for the previous period, it still represents a significant investment in India’s educational future.

The TCS Conundrum: A New Hurdle for International Aspirants

While the domestic education scene brightens, the path to studying abroad has become more complex. The changes in Tax Collection at Source (TCS) provisions introduced in Budget 2024 have direct implications for students planning to pursue higher education overseas.

Understanding TCS and Its Impact

TCS, or Tax Collection at Source, is typically a tax payable by sellers, collected from buyers at the time of sale. However, in the context of overseas education, it now applies to remittances for foreign education expenses.

For students financing their international education through loans from financial institutions, the TCS rate remains nil up to Rs 7 lakh. However, for expenses exceeding this threshold, a 0.5% TCS rate applies. The scenario is more demanding for self-financing students, who face a 5% TCS rate on amounts over Rs 7 lakh.

This change effectively increases the upfront costs for students embarking on their international education journey. For instance, a student with annual expenses of Rs 10 lakh would need to pay an additional TCS of Rs 3 lakh, either at 0.5% or 5%, depending on their financing method.

Budget Relief or Added Burden?

The answer to whether studying abroad has become more expensive is nuanced. For those relying on education loans, the impact is relatively minor, with only a 0.5% TCS on amounts exceeding Rs 7 lakh. However, for self-financing students, the 5% TCS on amounts over Rs 7 lakh represents a significant additional cost.

It’s important to note that TCS is not an additional tax but rather an advance tax payment. Students can claim credit for the TCS paid against their income tax liability, and any excess amount is refundable. However, this still represents a substantial upfront cost that students must bear.

Mitigating the Impact: Strategies for Aspiring International Students

Despite the increased financial pressure, several strategies can help mitigate the impact of the new budget on study-abroad plans:

Early Financial Planning: Start saving and planning for education expenses well in advance to cushion the impact of additional costs. This might involve setting up dedicated education savings accounts or exploring investment options that offer good returns.

Exploring Scholarships: Intensify efforts to secure scholarships and grants from international universities and organizations. Many institutions offer generous financial aid packages to international students, which can significantly offset the increased expenses.

Loan Optimization: For those opting for education loans, carefully structure the loan amount to minimize the TCS impact while ensuring adequate funding. This might involve taking a loan that covers just over Rs 7 lakh to benefit from the lower TCS rate on the excess amount.

Alternative Destinations: Consider studying in countries with lower living costs or those offering more generous financial aid to international students. 

Hybrid Learning Models: Explore programs that offer a mix of online and on-campus learning. This could potentially reduce overall costs by allowing students to complete part of their studies from India.

Part-Time Work Opportunities: Research and take advantage of part-time work options available in the destination country. Many countries allow international students to work a certain number of hours per week, which can help offset living expenses.

The Road Ahead

Budget 2024 marks a pivotal moment in India’s approach to higher education. While it strengthens domestic options, it also challenges those with international aspirations to be more financially sound and resourceful. The government’s focus on enhancing domestic education quality and accessibility could, in the long run, reduce the perceived need for international education. However, for many, the allure of global exposure and world-class institutions remains strong.

As India continues its journey towards becoming a global education hub, the experiences and contributions of students who study abroad will remain invaluable. The challenge now is to strike a balance between nurturing domestic talent and facilitating global exposure, ensuring that Indian students are well-equipped to thrive in an increasingly interconnected world.