No tax cuts, FM tries to make life easier for taxpayers in Budget 2026 –

Having already offered tax cuts last year, the State Department has chosen to make life easier for taxpayers. It promised simpler tax return forms and staggered filing timelines, while decriminalizing many provisions.

For those who have children studying abroad, or traveling abroad for medical reasons, the TCS will be reduced from 5% to 2%, so if they are making payments from private sources under the Liberalized Transfer Scheme, a smaller amount will be secured. TCS will also be reduced on outbound flight packages.

TCS Cut: More money you can spend on foreign tripsThe Budget proposed to reduce the tax collected at source (TCS) for self-funded education and medical purposes abroad under the liberalized remittance scheme from 5% to 2%.

However, the TCS rate for other purposes will continue at 20%.Last year, the government exempted financial transfers for education from TCS as such transfers are from a loan taken from a specified financial institution.The Finance Minister also proposed reducing the TCS on outbound itineraries to 2%. Currently, TST is levied on these expenses at the rates of 5% (for remittances up to Rs 10 lakh) and 20% (for remittances exceeding Rs 10 lakh).

This step will boost travel abroad.Under the liberalized remittance scheme, all resident individuals, including minors, are allowed to freely transfer up to $250,000 in a financial year without obtaining prior approval from the Reserve Bank of India. This allows an individual to send money to a child studying abroad for education, investment or to take a vacation.The government’s decision to reduce TCS on tour packages to 2% will ease the upfront cash burden on travelers and boost outbound tourism.

While the TCS is adjustable against the traveller’s final tax liability, it is paid in advance and remains locked with the government for months, impacting liquidity.The change will lower the entry barrier for high-value travel, said Jahol Prajapati, research analyst at Samco Securities. “A family had to withhold additional payment from the government for several months. Now the capital remains in their pockets, effectively lowering the barrier to entry for luxury travel,” he said.Travel companies echoed these sentiments. Rekant Bitti, co-founder of EaseMyTrip, said the TCS cut was among the most important budget measures for the sector. Rajesh Magu, co-founder of MakeMyTrip, said the rationalization directly addresses the liquidity impact faced by Indian outbound travelers. This could unlock pent-up demand, said Rahul Borud, co-founder of StampMyVisa.SNVA Traveltech president Alok K Singh said the TCS cut “will enable better financial planning for travelers and tour operators while supporting responsible and transparent spending”.