TCS blow softened for tour groups, foreign-bound students

In a move expected to ease the tax burden on foreign tour packages, Budget 2026 has proposed a uniform 2% Tax Collected at Source (TCS) on overseas tour packages, replacing the current 5% rate for up to ₹ 10 lakh, and 20% on higher amounts.

- Shipra Singh

Harshal Bhuta, partner at P. R. Bhuta and Co. CAs, said removing slab-based differentiation and cutting the rate to a uniform 2% will help local tour operators. “It aims to encourage Indian travellers to use local tour operators as foreign operators were not complying with TCS requirements, therefore enjoying an unfair competitive advantage,” he said.

The proposed cut in TCS on education and medical remittances above ₹ 10 lakh—from 5% to 2%—will provide much-needed relief and better align with TCS’s original aim of tracking high-value foreign remittances. At the same time, TCS on overseas tour packages has been rationalised to a uniform 2%, removing the earlier slab-based structure.