Budget 2026: Govt Slashes TCS on Foreign Tours, Education Remittances to 2% [Read Finance Bill 2026]

The Union Budget for the Financial Year 2026–27 was presented by Finance Minister Nirmala Sitharaman in the Lok Sabha today (Sunday, 1 February 2026), with the Government announcing a sharp reduction in Tax Collected atSource (TCS) on overseas tour packages and education-related remittances under the Liberalised Remittance Scheme (LRS).

As per the proposals, the TCS rate on overseas tour programme packages will be brought down to 2%, from the existing rates of 5% and 20%, without any minimum amount threshold. The move is expected to significantly reduce the upfront tax burden on individuals planning foreign travel.

In another relief measure, the Finance Minister announced that the TCS rate on remittances for education and medical purposes under LRS will also be reduced from 5% to 2%, easing cash-flow pressures for students and families seeking treatment abroad.

The Government said the measures are aimed at improving ease of living and simplifying the tax framework, while ensuring that tax compliance does not result in undue financial strain on citizens.

Lower TCS rates will reduce the amount blocked at the time of remittance, even though final tax liability will continue to be determined at the time of filing returns.

The TCS cuts form part of a broader direct tax reform package announced in Budget 2026, which also includes the introduction of a new Income Tax Act, 2025, scheduled to come into effect from April 1, 2026, with simplified rules and redesigned tax forms.

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