The Union Budget 2026–27 brings timely relief for Indian travellers by removing one of the biggest financial roadblocks in planning an overseas trip: the heavy tax burden at the booking stage.
While presenting the Budget in the Lok Sabha, Finance Minister Nirmala Sitharaman announced a simpler and much lower Tax Deducted at Source (TDS) rate for international tour packages. The new system replaces the old slab-based rates with a single flat rate of 2%.
For people and families planning trips abroad, this change makes travel more affordable, simplifies payments, and makes planning easier and more predictable.
This guide explains how the new rule works, how it is different from the previous system, and how travellers can benefit from the other remittance changes in Budget 2026.
Why this Budget announcement matters for Indian travellers
In recent years, more people from India have been travelling abroad. Still, many found booking a trip stressful, not due to higher travel costs, but because of the tax that had to be paid upfront when confirming a tour package.
Although this tax could be adjusted later when filing income tax returns, having to pay a large amount upfront often disrupted travel budgets and delayed decisions. For families and first-time international travellers, finding this extra money on short notice was a major challenge.
The Union Budget 2026 addresses this problem by reducing the upfront tax and simplifying tax calculations.
What exactly has changed under Budget 2026 for overseas tour packages?
Previously, the TCS for international tour packages was based on the total booking amount. The tax rate would jump sharply if a traveller spent over a certain amount, which caused confusion and financial stress.
Under the revised proposal:
- A uniform 2% TCS will apply to all overseas tour packages
- The earlier slab-based structure has been fully removed
- No minimum transaction limit is required for the lower rate
Now, travellers do not have to worry about their booking amount putting them in a higher tax bracket. Every tour package is taxed the same way.
What is treated as an overseas tour package?
An overseas tour package is a bundled travel product from a tour operator. It usually combines several services into one booking, such as:
- international travel arrangements
- accommodation outside India
- local transfers and organised sightseeing
- meals, lodging and guided experiences
- other travel-related services provided together
When these services are offered together as one package, TCS is charged at the time of booking.
It is important to know this because the new 2% TCS applies only to these bundled tour packages.
Why the new 2% TCS rule is a meaningful improvement
Earlier, the tax rate went up quickly for more expensive tour packages. This did not change the total tax you owed, but it did mean you had to pay much more upfront at the time of booking. For premium or long trips, this extra payment often led to delays or cancellations. The new system gives travellers three main benefits.
The new rule has an immediate and clear impact.
You pay less at the time of booking
The lower TCS means you pay less to the tour operator when you confirm your booking. Your travel budget is more flexible. More funds can be reserved for experiences, upgrades, and trip-related services instead of being temporarily locked in tax deductions.
Planning international travel becomes easier
For middle-income families and first-time travellers, the lower upfront cost makes travel more accessible and builds their confidence.
Tax calculation is now simple and predictable
With a single tax rate, travellers can easily understand their invoice and don’t have to worry about hidden changes or sudden tax increases.
Understanding TCS in the context of travel bookings
The tour operator collects TCS when you pay for an overseas tour package. This amount is sent to the government and appears on your tax records.
You can adjust or claim this amount when you file your income tax return. The main problem was always having to pay up front, not the tax itself. By lowering the rate, Budget 2026 reduces this immediate financial impact.
Before and after Budget 2026 – a simple comparison
Earlier system
Travellers had to pay different tax rates depending on how much they spent on their tour package. Sudden tax increases at higher booking amounts made it hard to plan and discouraged people from booking premium trips.
New system
Now, a flat 2% rate applies to all overseas tour packages. This makes booking more transparent, easier to calculate, and much better for your cash flow.
Additional relief under the Liberalised Remittance Scheme (LRS)
Budget 2026 offers relief beyond just leisure travel. It also brings important changes to the Liberalised Remittance Scheme, helping families who send money abroad for essential needs.
Under the new proposal:
- Remittances made for education abroad will attract 2% TCS
- Remittances made for medical treatment overseas will also attract 2% TCS
- The reduced rate applies when such remittances exceed ₹10 lakh
Earlier, both were taxed at higher rates, making it harder for families to afford the costs of overseas education and healthcare.
Annual remittance limits remain unchanged
Resident individuals, including minors, can still send up to USD 250,000 per financial year under the Liberalised Remittance Scheme for allowed transactions.
Travellers and families should continue planning their international remittances within this limit.is important for India’s outbound travel ecosystem
Indian travellers are now taking longer trips, seeking unique experiences, and visiting multiple countries. High taxes on bigger bookings had become a major barrier to these new travel trends.g slab-based taxation on tour packages, Budget 2026:
- supports aspirational and premium travel
- encourages travellers to use regulated and transparent tour operators
- improves trust in organised travel services
This helps strengthen, sustain, and benefit consumers in the outbound travel market.
The Union Budget 2026–27 creates a much more supportive environment for Indians travelling abroad, whether for holidays, education, family reasons, or medical needs.
Lower upfront deductions, simpler tax rules, and better cash-flow management now make overseas travel much more realistic and easier to plan than before.
For many Indian households, it is now easier to travel internationally, with fewer financial and paperwork barriers.
Plan your international trip smartly after Budget 2026 with Unimoni
With the new, simpler TCS structure, travellers can plan overseas trips with confidence and not worry about sudden tax surprises when making payments.
Unimoni Travel & Holidays supports travellers at every step of their journey, from personalised international tour packages and visa help to travel insurance and foreign exchange services.
With over 24 years of experience, operations in 10 IATA locations, and millions of happy customers, Unimoni Travel & Holidays helps you plan international travel with confidence, clarity, and peace of mind!
