Finance Minister Nirmala Sitharaman, while presenting her ninth Budget in the Parliament today on February 1, 2026, has proposed to cut the TCS rate on remittances made abroad for the purpose of education and medical expenses.
New Proposals
“The earlier TCS rate of up to 20% on overseas travel under the Liberalised Remittance Scheme (LRS) was seen as unfriendly and had the effect of discouraging foreign travel. Under LRS regulations, overseas remittances exceeding Rs 7 lakh in a financial year attract TCS, which significantly increases the upfront cost for individuals.
In Budget 2026, the Finance Minister has proposed a rationalisation of TCS rates on certain foreign payments. While overseas tour packages earlier attracted TCS at 5%—and 20% beyond Rs 10 lakh—and education or medical remittances under LRS were subject to 5%, the new proposal introduces a uniform TCS rate of 2% across these categories.
This simplified, and significantly lower rate makes overseas transactions more affordable and reflects a far more open and taxpayer-friendly approach,” said Amit Agarwal, Partner, Nangia & Co LLP.
Current Rates
At present, TCS at 5% is collected if remittance is for the purposes of education or medical treatment and the remittance amount is more than Rs 10 lakh rupees. It is proposed to reduce the rate of TCS to
2%.
Currently, TCS is levied at the rate of 5% and 20% on the sale of overseas tour programme package including expenses for travel or hotel stay or boarding or lodging or any such similar or related expenditure. It is proposed to reduce the rate of TCS to 2%. FM has proposed that the threshold for applicability of the provision be removed and TCS on the sale of overseas tour programme packages be collected at 2% irrespective of the amount. This will address the concern of the shift of business from domestic tour operators to overseas tour operators.
Supreme kothari, Partner, Economic Laws Practice says, “The Budget has brought in big relief for Indians travelling overseas. TCS on overseas tour packages are proposed to be cut to 2% from the existing slab-based rates of 5%/20%, with no minimum limit, making international bookings cheaper and simpler.”
The amendment will take effect from the 1st day of April, 2026.