3 min readMumbaiFeb 2, 2026 06:30 AM IST
IN A major relief for students pursuing education abroad, overseas travellers and individuals seeking medical treatment outside the country, the Union Budget 2026 has announced a substantial reduction in Tax Collected at Source (TCS) under the Liberalised Remittances Scheme (LRS). The TCS rate on remittances for foreign education, international travel packages and medical expenses has been slashed from 5 per cent to 2 per cent, easing the upfront tax burden on residents.
The move is expected to lower the cost of overseas spending and ease up making foreign remittances. The reduced TCS will give a boost to outbound tourism, overseas education plans and medical treatment abroad, experts said.
Zubin Karkaria, Founder and CEO, VFS Global, said, “The Budget charts a strong roadmap to Vision 2047, positioning tourism, mobility and human capital as engines of long-term growth. By recognising tourism as a catalyst for jobs, foreign exchange and regional development, the government is building a more competitive and resilient travel ecosystem. Reductions in TCS on overseas tour packages and TDS under LRS for education will ease financial pressure on Indian travellers and students, boosting global mobility and connectivity.”
Under the LRS of the RBI, resident individuals, including minors, can freely remit up to $2,50,000 per financial year for current or capital account transactions. These transactions include education, studies abroad, travel, medical treatment abroad, purchase of property and investments in foreign stocks.
Amit Maheshwari, Managing Partner, AKM Global, said, “Cutting TCS on education and medical remittances under the LRS offers meaningful relief to families funding overseas education and critical medical needs, improving cash flows at a time when global costs remain elevated.”
Since the introduction of TCS, remittances for overseas education, foreign travel and medical treatment have witnessed a noticeable decline over the past year.
The higher upfront tax requirement increased the immediate financial burden on individuals and families, leading many to defer, scale down or reconsider their foreign expenditure plans. The impact was particularly visible in overseas education and leisure travel.
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Remittances by resident Indians under the LRS have declined by 6.84 per cent to $29.563 billion in FY2025, down from $31.735 billion in the previous year.