Expenses such as university tuition, medical treatment, or foreign travel run into several lakhs and a lower TCS means families don’t have to block a large sum with the government
If you are planning to travel or study abroad, then Nirmala Sitharaman’s Sunday budget will surely lift your spirits.
The finance minister, while presenting her ninth Union Budget, announced that Tax Collected at Source (TCS) on overseas tour packages would be brought down from the earlier rates of 5 per cent and 20 per cent to 2 per cent with no minimum amount condition, pulling down the booking cost and making international travel more affordable for the aam aadmi.
The move covers all overseas travel bookings and is intended to streamline payments while easing the upfront tax impact for travellers at the point of booking.
Similarly, TCS on education and medical remittances under the Liberalised Remittance Scheme (LRS) route has been cut from 5 per cent to 2 per cent, lowering the upfront deductions for families sending money abroad for studies or medical treatment.
Expenses such as university tuition, medical treatment, or international travel often run into several lakhs. A lower TCS means families don’t have to block a large sum with the government for months before refunds or adjustments, helping them manage savings, EMIs and day-to-day expenses more comfortably.
For middle-class families relying on education loans, personal savings or short-term borrowing, the cut reduces the need for additional loans or distress withdrawals. This is particularly helpful for parents funding children’s overseas studies or medical treatment abroad.
Officials view the revised TCS framework as an effort to ease the cash-flow strain that travellers and service providers experienced after the sharp hikes introduced in 2023. With overseas travel picking up strongly after the pandemic and becoming a major source of foreign exchange outgo, the change is expected to give a meaningful lift to outbound tourism.
The travel and tourism sector, which had long raised concerns about the earlier TCS regime being too onerous, is likely to gain from better liquidity and faster, hassle-free transactions. Tour operators expect the sharp reduction in upfront costs to translate into a rise in bookings for overseas travel packages.
