In her Union Budget 2026-27 speech, Finance Minister Nirmala Sitharaman announced a series of measures to ease the financial burden on taxpayers and promote transparency in cross-border transactions. A key highlight was the reduction of Tax Collected at Source (TCS) rates on overseas travel and education-related remittances.
Lower TCS for Overseas Tour Packages
The Finance Minister proposed to cut TCS on the sale of overseas tour packages from 5% and 20% to just 2%, with no minimum amount required. This move aims to reduce the upfront tax burden for individuals planning international travel, making foreign trips more affordable and encouraging tourism-related spending.
Education and Medical Remittances Made Easier
In addition to travel, TCS on foreign remittances for education and medical purposes under the Liberalised Remittance Scheme (LRS) will also be reduced from 5% to 2%. This change will particularly benefit families sending funds abroad for higher education or medical treatment, easing cash-flow constraints and simplifying compliance.
A Broader Push for Tax Ease
These measures are part of a larger push to simplify direct tax compliance in Budget 2026. By lowering TCS rates and removing minimum thresholds, the government seeks to streamline financial processes for individuals and reduce administrative friction.
Experts say that the TCS reduction is a welcome step for NRIs, students, and families with international obligations, allowing them to plan expenditures without worrying about high tax deductions at source.
The Finance Minister also emphasized that these changes, alongside other initiatives such as staggered return filing timelines and automated lower/nil TDS certificates, are designed to make the Indian tax system more transparent, taxpayer-friendly, and efficient.