The Budget proposes that the Tax Collected at Source (TCS) for remittances under the education and medical treatment category be reduced from the current rate of 5 per cent collected to 2 per cent for a minimum remittance of ₹10 lakh.
S. Sriram, Executive Partner, Lakshmikumaran & Sridharan Attorneys says that though the TCS collected on remittances is available as credit against the final tax liability, it has earlier operated as a cash flow cost. “The change should ease liquidity pressures for families, and reduce the need to claim refunds through return filing. This will reduce blockage of funds materially,” he added.
The proposal has also included a reduction of TCS on overseas tour programme packages from the current 5 per cent for remittances below ₹10 lakh and 20 per cent for remittances above ₹10 lakh to a 2 per cent blanket rate without any amount threshold.
The government had in last year’s budget increased the minimum threshold for TCS collection for LRS remittances to ₹10 lakh from the earlier ₹7 lakh.
Total remittances as of November 2025, stood at $1,937.2 million a sequential decline of 18 per cent from $2,364.5 million in October 2025.
Published on February 1, 2026
