Budget 2026 TCS Cut: How It Impacts International Travel for Indians

In the Union Budget 2026, TCS on foreign travel was reduced to 2% on tour packages from the earlier rates of 5% and 20%. While this does not directly make international travel cheaper, it lowers the upfront payment travellers make at booking. This blog explains what the Budget 2026 TCS on foreign travel means for travel plans and how it simplifies overseas remittances.

What the Budget 2026 TCS Cut Means for Overseas Travel

The TCS cut targets remittances for overseas tour packages under the Liberalised Remittance Scheme (LRS). Previously, overseas tour packages faced a tiered structure:

• 5% TCS on amounts up to ₹10 Lakh
• 20% TCS on amounts beyond ₹10 Lakh

Now, a uniform 2% rate applies to all tour package amounts with no slab limits. This change removes the threshold, meaning whether a traveller is spending ₹5 Lakh or ₹50 Lakh on a package, the same 2% applies throughout.

TCS credits to the traveller’s Form 26AS for later adjustment against their income tax liability, not as additional tax. This eases liquidity constraints, allowing them to allocate funds more flexibly for their travel plans without waiting months for refunds.

Also Read - CPC in Income Tax: Full Form, Meaning & Role Explained

How Does the TCS Cut Affect Travellers’ Budgets?

Lower TCS on overseas packages means lower initial cash outflow at the time of booking, making trips more financially manageable. For instance, a family of four planning a ₹20 Lakh trip now pays just Rs 40,000 in TCS instead of ₹3.5 Lakh, freeing up significant liquidity for accommodation and activities.

Also Read - Income Tax High‑Value Transactions in India: Meaning and How to Respond

To Conclude

The Budget 2026 reduces upfront tax payments on overseas tour packages with 2% TCS and makes trips more financially manageable. This change frees up significant cash for other travel expenses.

If you’re a traveller planning an overseas trip, Poonawalla Fincorp offers Personal Loan options that can help you manage your travel expenses.

FAQs

Is TCS an additional tax on top of my income tax?

No, TCS is tax collected upfront that is credited to one’s account. They can recover it during income tax return filing as an adjustment against their final tax liability.

How much can I remit annually for travel under LRS?

You can remit up to $250,000 per financial year for permitted purposes, which include overseas travel and tour packages.

Does this apply to individual flight bookings or only packages?

The 2% rate applies to overseas tour packages arranged by tour operators; individual flight or hotel bookings may have different treatment, and it should be verified with the service provider.

How does the 2% TCS cut affect my total travel expenses?

The 2% TCS cut reduces your upfront payment on overseas tour packages, allowing you to manage other travel expenses more comfortably.