- TCS on overseas tour packages cut to 2%, lowering upfront costs for travellers.
- Flat TCS rate replaces 5% and 20% slabs, making foreign holidays more affordable.
- Budget 2026 boosts tourism with new trails, cultural sites and better connectivity.
The Union Budget 2026 has brought welcome relief for Indians planning trips abroad. Finance Minister Nirmala Sitharaman announced a sharp reduction in the Tax Collected at Source (TCS) on overseas tour packages, lowering the upfront tax burden on travellers. The new measure aims to make international holidays more accessible to a wider segment of Indian consumers, while simplifying the process of booking foreign tours. The announcement forms a key part of the government's broader effort to ease financial compliance for individuals.
TCS On Overseas Tour Packages Cut To 2 Per Cent
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The Finance Minister stated that the TCS on overseas tour programme packages will be reduced from the current 5% and 20% slabs to a flat 2%, with no minimum transaction amount.
This uniform rate significantly lowers the tax paid at the time of booking, making foreign travel more cost‑effective. The removal of amount‑based thresholds also simplifies the system, benefiting families, first‑time travellers, students and holiday‑makers planning international trips.
How The Travel Industry Reacted To The TCS Cut For Overseas Travel
Karan Agarwal, Director, Cox & Kings, shared his thoughts on the Budget 2026-27 and said, “The reduction of TCS to 2% on overseas tour packages and LRS remittances for education/medical purposes cuts the upfront cash drag for travellers and families. Where customers previously faced up to 5%-20% held at source on big ticket spends, this change effectively unlocks ₹10,000-₹40,000 for every ₹10 lakh spent abroad.”
He added, “We expect a rebound in booking confidence and smoother discretionary spend cycles, especially in peak seasons, as the cost becomes less punitive and cash flows stay with the customer longer.”
Budget 2026: What Changes Will The Travel Industry See
1. National Institute of Hospitality
The Finance Minister announced plans to upgrade the National Council for Hotel Management and Catering Technology into a National Institute of Hospitality. The new institution will serve as a link between academia, the hospitality industry and government bodies, helping to strengthen professional training and skill development in tourism‑related fields.
2. Pilot Scheme for Training Tourist Guides
A pilot programme will be launched to train guides across major tourism hubs. The initiative aims to enhance visitor experiences by creating a more skilled, better‑equipped pool of certified guides.
3. Ecologically Sustainable Mountain and Turtle Trails
Recognising India's potential as a trekking destination, ecologically sensitive mountain trails will be developed in Himachal Pradesh, Uttarakhand, Jammu & Kashmir, Araku Valley in the Eastern Ghats, and Pothigai Malai in the Western Ghats.
Additionally, turtle trails will be created across nesting sites in Odisha, Karnataka and Kerala, promoting conservation‑linked tourism.
4. Archaeological Sites as Cultural Destinations
Fifteen archaeological sites will be transformed into immersive cultural destinations. Curated walkways will open up excavated landscapes to the public, allowing visitors to engage more deeply with India's historical heritage.
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5. Five Tourism Hubs in Purvodaya States
Five major tourism destinations will be developed across the Purvodaya states - Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh. The government will also support transport infrastructure through the provision of 4,000 e‑buses.
6. Seven High‑Speed Rail Corridors
To strengthen long‑distance connectivity, seven high‑speed rail corridors will link key cities, including routes such as Mumbai–Pune, Hyderabad–Bengaluru, Chennai–Bengaluru, and Delhi–Varanasi. These corridors aim to boost sustainable mobility and support tourism growth.
