Overseas Education Payments In India: Rules, Regulations And Challenges Under FEMA, 1999
Archi Ojha, Amity University Kolkata
ABSTRACT
Every year, hundreds of thousands of Indian families move money across the border to pay for education. The legal character of that movement appears simple: the Foreign Exchange Management Act, 1999 (“FEMA”) treats expenses for the education of a person’s children, spouse and parents abroad as a current account transaction, which is, in principle, free from restriction. Yet the lived experience of remitting tuition fees is shaped by a dense stack of rules beneath the statute: the Current Account Transactions Rules, the Liberalised Remittance Scheme (“LRS”) and its Master Direction, the operational discretion of Authorised Dealer banks, a tax-collection-at-source regime under income-tax law, anti-money-laundering obligations and a penal framework that can attach even to technical lapses. This article maps that architecture, traces how the law arrived at its present form, and examines the practical and doctrinal challenges that students and their families face, including documentation friction, tax cash-flow burdens, exchange-rate exposure, informal channels and fraud, and uncertainty over residential status. It argues that the regime is liberal in design but fragmented in delivery, and proposes calibrated reforms, namely a digitised student- remittance pathway, harmonised FEMA and tax data, regulated education intermediaries and graded compounding for technical lapses, that would preserve the regime’s anti-evasion objectives while reducing the compliance burden on bona fide remitters. The article states the law as understood in October 2026.
Keywords: FEMA, 1999; overseas education; Liberalised Remittance Scheme; current account transactions; Authorised Dealers; tax collected at source; Reserve Bank of India.
