Going abroad to study? Know these insurance, banking and tax essentials - Hindustan Times
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Going abroad to study? Know these insurance, banking and tax essentials

By, New Delhi
Feb 15, 2024 12:53 PM IST

Every Indian student should know the basics of insurance, banking & taxes in their study-abroad destination.

When considering global education, selecting appropriate travel and health insurance is paramount. According to an International Journal of Travel Medicine and Global Health report 15-20% of students face some form of health issue while studying abroad.

Choosing a suitable insurance is of utmost importance. So is understanding banking options.(Getty Images/iStockphoto)
Choosing a suitable insurance is of utmost importance. So is understanding banking options.(Getty Images/iStockphoto)

Choosing a suitable insurance is of utmost importance. So is understanding banking options. A recent survey by the Institute of International Education stated that 34% of students encountered challenges with overseas banking, highlighting the need for prior research into local banking practices, fees, and international transaction policies.

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In an exclusive interview, Raghwa Gopal, CEO, M Square Media (MSM) Group, delineates everything about insurance, banking & taxes that every Indian student should know before going abroad for higher studies.

Is insurance mandatory for all study-abroad destinations?

Insurance requirements for studying abroad vary, with a report by International Student Insurance indicating that over 75% of higher education institutions in popular destinations such as the US, UK, and Australia require international students to have health insurance.

Students from India can either purchase insurance before departure, which, according to Bajaj Allianz, about 60% opt for immediate coverage, or buy it upon arrival following local mandates. Research is vital, as a study by the National Institute of Health shows that 30% of students who do not adhere to local insurance norms face compliance issues.

What is the average insurance amount required and what does it cover?

The average insurance amount varies significantly depending on the destination country and the extent of coverage. For instance, in the United States, the average annual health insurance cost for international students ranges from $1,500-$2,500, as reported by the International Education Financial Aid organisation.

This typically covers medical expenses, including doctor's visits, hospital stays, emergency services, and prescription medicines. In countries like Germany and Australia, the average cost is comparatively lower, around $500-$800 annually, partly owing to the subsidisation of healthcare systems in these countries.

What are the big dos and don'ts of choosing an insurance provider?

Dos:

• Research thoroughly: Look into multiple providers to compare coverage and costs.

• Know the coverage detail: Ensure the plan covers essential medical services, including emergencies, mental health, and any specific health needs you might have.

• Check compliance: Verify that the plan meets the legal requirements of your destination country and your educational institution.

• Review claim process: Understand how to file claims and the timeframe for reimbursements.

Don'ts:

• Ignore the fine print: Avoid overlooking exclusions and limitations in the policy.

• Choose solely based on the price: The cheapest option may not provide adequate coverage.

• Forget about network hospitals: Ensure there are accessible in-network hospitals or clinics near your study location.

• Delay purchasing: Don’t wait until the last minute, as some countries require proof of insurance for visa processing.

Name the top 5 insurance providers for students going abroad for higher studies.

The top 5 insurance providers that offer reliable and wide-coverage services in India are:

HDFC Ergo, ICICI Lombard General Insurance Co. Ltd, Bajaj Allianz General Insurance: (particularly known for their ‘Student Companion Plan’), Reliance General Insurance and TATA AIG General Insurance Company Limited.

What are the important details a student should know before opening a bank account in a foreign country?

Research local bank requirements: According to a survey by HSBC, approximately 70% of international students are required to provide specific documentation like a student visa, university enrolment letter, and proof of address to open a bank account.

Understand the charges: The Global Student Mobility 2021 report indicates that about 40% of international students encounter unexpected banking fees. Carefully read the maintenance fees, transaction costs, and international transfer fees.

Check for international student services: Some banks offer special services for international students, which, as per a report by Education International, 50% of students find beneficial, like multi-currency accounts or reduced fees.

Inquire about any overdraft facilities: Understanding overdraft terms is imperative, as the International Education Financial Aid organisation reports that 30% of international students experience budget management issues.

Are there limits to remittances from India to the bank in a foreign country?

Under the Reserve Bank of India's (RBI) Liberalised Remittance Scheme (LRS), Indian students can remit up to $250,000 per financial year to a foreign bank account for education-related expenses.

This limit includes the cost of tuition, living, and other expenses. It's important to note that for amounts exceeding INR 7 lakh in a fiscal year, a Tax Collected at Source (TCS) certificate is required. However, these regulations are subject to change, so it's advisable to refer to the latest RBI guidelines for updated details.

Are there any tax basics that students should be aware of?

Yes, every student studying abroad or planning to study abroad should be aware of a few tax basics:

Income tax: If you earn income in your study abroad country, like from a part-time job or internship, you may be liable to pay local taxes. Understand the tax-free income threshold and filing requirements in that country.

Double taxation: India has Double Taxation Avoidance Agreements (DTAAs) with many countries. This means if you pay tax in one country, you may get relief from tax or a credit in the other. Familiarise yourself with these agreements to avoid double taxation.

Reporting global income: If you’re an Indian resident for tax purposes, you must report your global income in India. This includes income earned abroad.

Tax benefits on education loans: If you have an education loan from India, you may be eligible for tax benefits under Section 80E of the Income Tax Act on the interest paid.

Also Read: Study Abroad: How a student must successfully apply to an Ivy League institution

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