2% TCS on Overseas Tour Packages: Government Cuts Rates for Foreign Travel, Education and Medical Payments

The Voice of Chandigarh | Travel Trade Reporter

In a significant relief for Indian travellers and families, the government has reduced Tax Collected at Source (TCS) to 2% on overseas tour programme packages, as announced in the Union Budget. This marks a sharp cut from the earlier TCS rate of 5% (and up to 20% in certain cases), which had increased the upfront cost of foreign travel.

The Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman along with the Ministers of State for Finance, Shri Pankaj Chaudhary as well as her Budget Team/senior officials of the Ministry of Finance arrived for the presentation of the Union Budget-2026 at Parliament House, in New Delhi on February 01, 2026.

The rationalisation also extends to foreign remittances for education and medical purposes, lowering the tax burden on students pursuing studies abroad and individuals seeking overseas medical treatment.

Officials clarified that TCS is not an extra tax, but an advance tax that can be adjusted against final income tax liability or claimed as a refund while filing returns. The move is expected to ease cash-flow pressures, simplify compliance, and encourage legitimate overseas spending.

Overall, the reduction to 2% TCS reflects the government’s intent to provide relief to the middle class while maintaining transparency and discipline in foreign remittances.