Travelling Abroad? Your TCS Just Got Cheaper

Sashind Ningthoukhongjam on 25 Feb 2026

AI Summary

New budget proposals will significantly reduce the Tax Collected at Source (TCS) on overseas remittances for travel, education, and medical expenses after April 1, improving immediate liquidity.

Key Takeaways

TCS on overseas tour packages will drop from the current 5% (up to Rs 10 lakh) and 20% (beyond Rs 10 lakh) to a flat 2%, regardless of the amount, effective April 1.
Similarly, TCS on education- or medical-related remittances exceeding Rs 10 lakh (if not loan-financed) will decrease from 5% to 2%.
This reduction means individuals will need to set aside substantially less upfront for foreign expenditures; for instance, a Rs 20 lakh overseas tour package will require Rs 40,000 in TCS instead of Rs 2.5 lakh previously.

Travelling Abroad? Your TCS Just Got Cheaper

When you plan foreign trips, you usually budget for how much you plan to spend on the trip. This can include hotel stays, shopping, flight tickets, tour packages, etc. Turns out, that’s not enough.

Due to tax collected at source (TCS), you need to create a buffer beyond what you actually plan to spend.

TCS is deducted by the remitter, which is generally banks and other financial institutions that provide money transfer services. It is a prepayment of tax and should not be thought of as an extra tax liability.

TCS can be adjusted against the final tax liability and is refundable if excess TCS was paid.

This TCS burden will likely be reduced after April 1, as the finance minister in the recent budget proposed reducing the TCS rates on overseas remittances.

TCS on overseas tour packages is 5% up to Rs 10 lakh and 20% for amounts beyond Rs 10 lakh. The budget proposed making this a flat 2%, regardless of the amount.

Overseas tour packages include flight tickets, accommodation/cruise bookings, visa-related payments, tour packages, etc.

If you spend Rs 20 lakh on overseas tour packages, you currently need to pay Rs 2.5 lakh as TCS. Our calculation shows that after April, you will only need to set aside Rs 40,000.

TCS on education- or medical-related remittances will also come down. Currently, there is a 5% TCS on such spends if they exceed Rs 10 lakh and are not financed through a loan. Post April, this rate will come down to 2%.

For instance, if you spend Rs 20 lakh on education or health abroad, you have to pay Rs 50,000 now versus Rs 20,000 after April 1.

Overall, the reduction of TCS in remittances will ensure more money lies in the hands of a person when they are remitting money outside.