The Union Budget 2026 has proposed significant reforms in the Tax Collected at Source (TCS) regulations. The new TCS rules are yet to be approved and implemented, starting April 1, 2026. However, if brought into effect, the new TCS in budget 2026 will significantly reduce the burden on taxpayers and simplify cross-border transactions for students, travellers, and those seeking treatment abroad. Let’s decode the proposed TCS reforms and how they can affect you as a remitter.
Also Read: How To Claim TCS Refund Online When Filing ITR?
Changes in TCS Rate in Budget 2026
Finance Minister Smt. Nirmala Sitaraman has proposed the following TCS reforms in the assembly:
- Reduction of TCS on educational foreign remittances exceeding ₹10 lakhs from 5% to 2%.
- Reduction of TCS on medical foreign remittances exceeding ₹10 lakhs from 5% to 2%.
- TCS on overseas tour program packages, currently at 5% (for amounts up to ₹10 lakh) and 20% (above ₹10 lakh), to be reduced to 2% regardless of the transaction amount.
Comparison of Present and Proposed TCS Regime on Forex Transactions 2026
| Type of Forex Transaction | Present TCS Regime | Proposed TCS Regime | ||
| Below ₹10 Lakhs | Above ₹10 Lakhs | Below ₹10 Lakhs | Above ₹10 Lakhs | |
| Education Purposes (financed by an education loan) | Not Applicable | Not Applicable | Not Applicable | Not Applicable |
| Education Purposes (financed by other sources) | Not Applicable | 5% of the amount above ₹10 lakhs | Not Applicable | 2% of the amount above ₹10 lakhs |
| Medical Treatment | Not Applicable | 5% of the amount above ₹10 lakhs | Not Applicable | 2% of the amount above ₹10 lakhs |
| Tourism | 5% of the total amount | 20% of the total amount | 2% of the total amount | 2% of the total amount |
| All Other Purposes | Not Applicable | 20% of the amount above ₹10 lakhs | Not Applicable | 20% of the amount above ₹10 lakhs |
Reduced TCS Rate for Educational Transfers
Current Regulation
Students or parents sending money abroad face a 5% TCS on remittances for education over ₹10 lakhs, if funded by sources other than educational loans. This tax applies to money transfers for tuition, living expenses, and other study-related costs.
Proposed Change
The government has proposed reducing TCS to 2% on the amount above ₹10 lakhs for education-related foreign remittances backed by other financial sources.
Impact
Financial Relief: With overseas education costs rising and education loans becoming harder to secure, this change eases the immediate financial pressure on families.
Encouragement for Abroad Studies: More students may now consider pursuing education in foreign institutions due to the reduced financial strain.
Simplified Cash Flow Management: Lower TCS means less money locked in as advance tax and more access to funds for education expenses, improving overall remittance efficiency.
Secure your educational loan in 3 simple steps with ExTravelMoney and pay all your study expenses at 0 TCS!
Why Choose Us:
1. Loan without collateral upto 1 Crore
2. Instant Sanction for Select Institutes
3. Minimal Documentation
4. Simple Online Processing
Apply Now
Reduced TCS Rate for Medical Transfers
Current Regulation
Individuals sending money abroad for medical treatment are required to pay 5% TCS on foreign remittances exceeding ₹10 lakhs in a financial year. This applies to expenses such as hospital bills, treatment costs, hospital accommodation, and related medical needs.
Proposed Change
The government has proposed reducing the TCS rate to 2% on the amount exceeding ₹10 lakhs for medical treatment-related foreign remittances.
Impact
Better Liquidity During Emergencies: Medical emergencies often require immediate and high-value payments. Lower TCS ensures more funds remain available for critical medical expenses instead of being locked until income tax refunds are processed.
Improved Access to International Healthcare: Patients seeking specialised treatments abroad may find it easier to manage costs, as less money is blocked as advance tax.
Reduced TCS on Overseas Tour Packages
Current Regulation
Payments for overseas tour packages attract 5% TCS up to ₹10 lakhs and 20% TCS on amounts exceeding ₹10 lakhs.
Proposed Change
The government has proposed a uniform 2% TCS rate on overseas tour packages, regardless of the total amount spent.
Impact
Lower Upfront Travel Costs: Travellers will no longer face heavy cash blockage while booking international tour packages, making travel more affordable.
Boost to International Travel: The reduced TCS may encourage more Indians to plan overseas vacations, especially premium or long-duration trips.
Simplified Tax Structure: A flat TCS rate removes confusion around multiple slabs and makes tax compliance easier for travellers and tour operators.
These changes reflect the government’s plan to simplify tax regulations and enhance financial ease for citizens. However, these proposals have not yet been implemented. The proposal must be approved by the Indian Parliament and officially published in the Gazette. So, stay updated on further clarifications and official notifications regarding the implementation of these reforms.
For simplified international money transfers to 100+ countries for all purposes, including education, medical, and tourism, visit ExTravelMoney!
Learn More: New TCS Proposals on International Money Transfer in Budget 2025
Ann Mariya Job is the Associate Content Writer at ExTravelMoney.com. Holding a Bachelor’s in Journalism, she excels in creating deeply researched, engaging, and crisp content. Her work helps readers understand the complexities of foreign exchange, overseas money transfers, and international travel.