Budget 2026: TCS cuts on LRS, tour packages to ease upfront cash outgo

Budget 2026 lowers TCS on foreign education, medical remittances and overseas tours, easing cash flow for families and simplifying compliance for NRI property deals

The Union Budget 2026-27 has proposed a reduction in tax collected at source (TCS) on remittances under the Liberalised Remittance Scheme (LRS) for education and medical treatment as well as on overseas tour programme packages.

 

TCS on remittances for education or medical treatment will be reduced to 2 per cent. Currently, on amounts exceeding ₹10 lakh, TCS is 5 per cent if the remittance is for education or medical treatment, and 20 per cent for other purposes. The rate for other purposes will remain unchanged.

 

The lower rate will ease cash flow pressures for middle-class families and individuals. “Those paying for foreign tuition and living expenses using personal savings will benefit. Students who fund their education through a loan from a recognised financial institution already enjoy a concessional TCS rate of 0.5 per cent,” said Ankit Jain, partner, Ved Jain & Associates.

 

Tour packages 

Finance Minister Nirmala Sitharaman has also proposed reducing TCS on the sale of overseas tour packages to 2 per cent from April 1. At present, TCS is 5 per cent on the aggregate amount up to ₹10 lakh, and 20 per cent if the aggregate amount exceeds ₹10 lakh. Under the proposed changes, the ₹10 lakh threshold will no longer apply.

 

“The upfront cash outflow will come down. Confusion caused by thresholds will end,” said Rajarshi Dasgupta, executive director (tax), Aquilaw.

 

“Travellers and families, particularly those whose aggregate spends exceed ₹ 10 lakh, will gain,” said Suresh Surana, a Mumbai-based chartered accountant.

 

No TAN on property sale by NRIs

 

From October 1, resident individuals and Hindu Undivided Families (HUFs) buying property from a non-resident Indian (NRI) will no longer be required to obtain a tax deduction and collection account number (TAN). They will be allowed to deduct tax at source (TDS) using their permanent account number (PAN).

 

“This reduces compliance burden by eliminating the need for a one-time TAN registration and subsequent quarterly filings for what is often a single transaction,” said Abhishek Kumar, Securities and Exchange Board of India (Sebi)-registered investment advisor and founder, SahajMoney.com.

The writer is a Mumbai-based independent journalist