12 Jun 2026From 1 April 2026, TCS on overseas tour packages is a flat 2% with no threshold (Budget 2026). Other foreign travel spending under LRS, such as forex and travel cards, is free of TCS up to ₹10 lakh a year, with 20% above that. TCS is not an extra tax: you claim it back against your income tax when filing your ITR.
Updated: 23 October 2026 | Regi Tom Antony & Associates, Chartered Accountants, Kochi
Tax Collected at Source (TCS) on foreign travel and remittances under the Liberalised Remittance Scheme (LRS) is one of the most misunderstood provisions affecting Indian travellers, NRIs and families funding overseas education or medical care. The Finance Act 2025 raised the TCS-free threshold from ₹7 lakh to ₹10 lakh from 1 April 2025, and Budget 2026 cut tour-package TCS to a flat 2%. Here is the current FY 2026-27 position.
What is TCS on foreign travel?
Under section 394 of the Income-tax Act, 2025 (section 206C(1G) of the 1961 Act until 31 March 2026), the bank, money changer or overseas tour operator collects TCS when you remit money abroad or buy a foreign tour package. It is an advance tax credit, not a final tax — it shows in your Form 26AS/AIS and is set off against your tax liability (or refunded) when you file your ITR.
TCS rates on foreign travel and remittances (FY 2026-27)
| Transaction | TCS rate (FY 2026-27) |
|---|---|
| Overseas tour package | 2% (no threshold, per Budget 2026) |
| Education — loan from financial institution (Sec 80E) | NIL |
| Education / Medical — self-funded | Nil up to ₹10 lakh; 2% above |
| Travel forex, gifts, maintenance, investment (other LRS) | Nil up to ₹10 lakh; 20% above |
| International credit-card spends abroad | Currently outside LRS / deferred |
The ₹10 lakh threshold is cumulative across all your LRS remittances other than tour packages (forex, transfers, cards) per PAN per financial year; tour packages attract 2% from the first rupee. The overall LRS limit remains USD 250,000 per individual per year under FEMA.
Worked example: family trip TCS
A family books a ₹12 lakh overseas tour package. At the flat 2% tour-package rate, TCS = ₹24,000 — fully creditable against the booker's income tax. If instead ₹12 lakh were sent as general travel forex, the first ₹10 lakh is TCS-free and 20% applies on the remaining ₹2 lakh = ₹40,000.
Five practical ways to manage TCS on travel
- Use the ₹10 lakh threshold per family member — each individual has their own limit; book each traveller's forex in their own name.
- Split large remittances across financial years — the threshold resets on 1 April.
- Book components separately where genuine — a non-bundled trip may fall outside the "tour package" definition.
- Always quote PAN — if your PAN is inoperative (not linked to Aadhaar), TCS is collected at twice the normal rate or 5%, whichever is higher, capped at 20%.
- Claim the TCS credit at ITR filing — it directly reduces tax payable, with refund of any excess.
Does TCS apply to NRIs?
TCS under 206C(1G) applies to resident individuals remitting under LRS. NRIs are outside LRS — their remittances are governed by FEMA rules, not TCS on this basis. If you are returning to India or hold RNOR status, your residency for part of the year can bring you within LRS — get this checked. For NRI FEMA and remittance planning, see nriblueprint.com.
Frequently asked questions
Is TCS on foreign travel an extra tax?
No. It is an advance tax credit shown in Form 26AS and fully creditable against your income tax, or refundable if your liability is lower.
What is the TCS rate on overseas tour packages in 2026?
A flat 2% under Budget 2026, with no threshold.
Is there TCS up to ₹10 lakh?
For general travel forex and other LRS purposes, no TCS applies up to ₹10 lakh per year; 20% applies above it.
Does TCS apply to forex bought at the airport or on a travel card?
Yes — airport forex and multi-currency travel cards fall under LRS and attract TCS once your annual LRS use crosses ₹10 lakh.
Regi Tom Antony & Associates advises individuals, business owners and NRIs on LRS planning, TCS credit claims and FEMA compliance. Related: TCS on Foreign Remittance, NRI Taxation, ITR Filing. Contact: letstalk@rtaandassociates.com | Kakkanad, Kochi.
Dedicated NRI guidance
For an in-depth, up-to-date guide on TCS on foreign remittances under the LRS, visit NRIBlueprint.com — our dedicated NRI tax & advisory site — or contact Regi Tom Antony & Associates for personalised help.