Budget 2026: Overseas tour packages to get cheaper with lower TCS

In a big announcement for international travellers, the Union Budget 2026 has significantly eased the cost of travelling abroad for Indians. Union Finance Minister Nirmala Sitharaman on Sunday, February 1, announced a reduction in the Tax Collected at Source (TCS) on certain overseas payments under the Liberalised Remittance Scheme (LRS), making international travel more affordable.

Sitharaman has proposed that TCS on overseas tour packages to be reduced to 2%, from the earlier slab-based rates of 5% and 20%, with no minimum threshold.

This means that TCS on international tour programmes will come down to a flat 2% from the existing 5% and 20% rates under the new rules, while there will be no condition of minimum amount.

This applies across allinternational travel bookings

and could reduce the tax burden at the time of purchase.

"I propose to reduce TCS rate on the sale of overseas tour program package from the current 5% and 20% to 2% without any stipulation of amount," she said.

The Budget 2026 also proposes to reduce tariff rate on all dutiable goods imported for personal use from 20% to 10%, while the basic customs duty on 17 drugs/medicines is to be exempted. It also announced duty free personal import of drugs/medicines and food for seven more rare diseases.

Moreover, it proposes to revise provisions governing baggage clearance during international travel. "Revised rules to enhance duty-free allowances in line with the present day travel realities," it highlights.

Similarly, the Finance Minister has proposed that TCS on education and medical remittances under the LRS route should be cut from 5% to 2%.

"I propose to reduce TCS rate for pursuing education and for medical purposes under the Liberalised Remittance Scheme (LRS) from 5% to 2%," she said in Parliament.

The reduction of TCS on overseas tour packages as well as on education and medical remittances under LRS to 2% is expected to ease down cash-flow pressure for individuals, making it affordable for more people to fulfill their wishes of foreign travel and studying abroad.

Reducing the TCS on overseas tour packages will not only make international bookings cheaper, but will also make it less complicated for the travellers across the country.

Besides this, Sitharaman also announced various things for Indians living abroad, noting that they will be able to invest more freely in equity instruments.