Union Budget 2026: Makes International Travel Affordable

• Written by Gungun Bhatia

  Reviewed by Anjali Sharma

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The Union Budget 2026 has provided important relief for Indian travellers by reducing upfront travel-related taxes. This makes international trips more affordable. The change aims to promote outbound tourism and reduce the financial burden on citizens.

Union Budget 2026: What Has Changed for the Travellers?

The Union Budget 2026, presented by Finance Minister Smt. Nirmala Sitharaman on February 1 2026, has introduced important changes that benefit Indians planning to travel abroad. One of the most notable announcements is the reduction in the Tax Collected at Source (TCS) on overseas tour packages. This tax had previously made international travel expensive when booking.

The new tax structure is viewed as a major step toward making foreign travel more accessible and affordable for more travellers.

Lower TCS on Overseas Tour Packages Slashed

A major highlight of the budget is the change in the Tax Collected at Source (TCS) on foreign tour packages. The government has simplified and lowered the rate, providing immediate savings for travellers. 

Some of the key changes announced are:

• TCS on overseas tour packages is now reduced to a flat 2%.
• Earlier rates varied from 5% to 20%, depending on the package value.
• The new rate applies equally, no matter the trip cost.
• Lower TCS means less upfront payment when booking.

This move significantly reduces the upfront amount travellers pay at the time of booking, even though TCS can be claimed later during income tax filing.

How Travellers Will Benefit?

The reduction in TCS lowers the initial cost of international travel. Even though the tax could be claimed earlier during income tax filing, many travellers found the high upfront payment a deterrent. 

The immediate benefits include:

• Reduced cash outflow when booking foreign holidays
• Improved cash flow for families and group travellers
• More predictable and clearer travel costs
• Increased affordability for leisure, family, and group travel

Experts think this move will encourage more Indians to plan vacations abroad, especially to popular places in Asia and Southeast Asia.

>> Read More: Enjoy No GST on Travel Insurance Premium in India

Impact on Outbound Tourism

The travel and tourism industry has welcomed the announcement, calling it a positive sign for outbound tourism. Lower costs are expected to increase demand for international destinations, especially in popular regions such as Asia and Southeast Asia.

In addition to tax relief, the budget has emphasised the government’s focus on improving tourism through better infrastructure, improved connectivity, and training programs for hospitality skills.

Relief Extended Beyond Leisure Travel

Apart from tourism, the Budget has also relaxed TCS rules under the Liberalised Remittance Scheme (LRS) for necessary overseas expenses.

The key changes include:

• TCS on foreign remittances for education and medical purposes has now been reduced to 2%. 
• This reduces the financial burden on students and families sending money abroad.

Overall, Budget 2026 is viewed as traveller-friendly, with steps to ease financial barriers and encourage overseas travel. With lower taxes and ongoing policy support, international travel is expected to gain stronger momentum in the years ahead.