The Finance Bill, 2026 (commonly referred to as Budget 2026) has introduced major changes in TCS (Tax Collected at Source) that directly impact NRIs, Indian residents, parents of students studying abroad, international travellers, and individuals making foreign remittances under LRS.

TCS on foreign travel, education abroad, and medical remittances has been reduced to a flat 2% from FY 2026–27.

These Budget 2026 TCS changes aim to reduce cash-flow blockage, refund delays, and confusion caused by earlier high TCS rates of 5% to 20%.

What is TCS on Foreign Remittance and Why It Matters So Much?

TCS (Tax Collected at Source) is collected at the time of:

• Overseas tour package payments
• Foreign remittances under the Liberalised Remittance Scheme (LRS)

Although TCS is refundable, high TCS rates created serious problems such as:

• Excess money blocked with the government
• Delayed income tax refunds
• Confusion among NRIs and travellers
• Poor liquidity planning

Because of this, searches like:

• “TCS on foreign travel refund”
• “TCS on LRS remittance”
• “Budget 2026 TCS changes”
• “TCS for NRIs”

have sharply increased.

Budget 2026: Key TCS Changes Explained in Detail

Flat 2% TCS on Overseas Tour Packages (Huge Relief)

Under Budget 2026, the government has completely restructured TCS on foreign travel.

New Rule:

• Flat 2% TCS on overseas tour packages
• No threshold limit
• Applies regardless of tour cost

Old Rule (Before Budget 2026):

• 5% TCS up to ₹7 lakh
• 20% TCS beyond ₹7 lakh

This earlier rule caused massive upfront payments, especially for:

• Family holidays
• Luxury travel
• Group tours

This change alone is one of the biggest tax reliefs for international travellers and NRI services in Budget 2026.

Reduced TCS on LRS Remittance for Education Abroad

For remittances under LRS for education purposes, Budget 2026 provides direct relief.

• Earlier TCS: 5%
• New TCS (Budget 2026): 2%

This is extremely beneficial for:

• Parents sending tuition fees abroad
• Living expense remittances
• Repeated education-related transfers

This change improves cash flow planning for parents of students studying abroad.

Reduced TCS on LRS Remittance for Medical Treatment Abroad

For foreign medical treatment remittances under LRS:

• Earlier TCS: 5%
• New TCS (Budget 2026): 2%

This ensures families are not burdened with excess tax deductions during medical emergencies.

Old vs New TCS Rates – Budget 2026 Comparison Table

When Do the New TCS Rules Apply?

• Effective from 1 April 2026
• Applicable for FY 2026–27 onwards

Any foreign remittance or overseas travel payment before 31 March 2026 will follow old TCS rates.

How Budget 2026 TCS Changes Help NRIs and Residents

For NRIs

• Easier family remittances from India
• Lower upfront tax deduction
• Faster refunds and smoother compliance

For Parents of Students Abroad

• Reduced TCS on frequent education remittances
• Better liquidity management

For International Travellers

• No more 20% TCS shock
• Lower cost of foreign travel

Important Clarification: Is TCS a Tax or Refundable?

This is one of the most misunderstood topics.

• TCS is NOT an additional tax
• TCS is adjustable or refundable

However:

• Higher TCS = more money blocked
• Lower TCS = better cash availability

That is why reducing TCS to 2% under Budget 2026 is extremely significant.

Budget 2026 TCS Changes – Simple Takeaway

Budget 2026 reduces TCS on foreign travel, education abroad, and medical remittances to a flat 2%, offering massive cash-flow relief to NRIs, parents, students, and international travellers from FY 2026–27, which also positively supports financial planning related to nri property sale services.

Why You Should Plan LRS & TCS Transactions Properly

Incorrect remittance planning can result in:

• Excess TCS deduction
• Refund delays
• Notice risk
• Cash-flow mismatch

At Dinesh Aarjav & Associates, we specialise in:

• LRS remittance planning
• TCS optimisation & refunds
• NRI tax advisory services
• Foreign income & asset compliance
• Income-tax return filing

Consult before making large foreign remittances or booking overseas travel.

Also Read:

FAST-DS 2026 Explained: NRI Foreign Asset Disclosure Scheme under Finance Bill 2026

Budget 2026: Major Relief for NRIs Selling Property in India – TDS Compliance Simplified

How Much Gold Can an NRI Bring to India in 2026? Latest Budget 2026 Update on Gold Jewellery

Budget 2026–27: Major Tax & Compliance Relief for NRIs – LRS, Foreign Assets Disclosure, ITR Revision & More