India Slashes Forex Fees for Students and Travelers

India's recent policy shifts are set to significantly benefit students and families engaged in international transactions. The Budget 2026 has reduced the Tax Collected at Source (TCS) rate to a flat 2%, a move that directly impacts education remittances and overseas tour packages. This reduction, effective from April 1, replaces previous rates of 5% and 20% respectively.

Furthermore, the Reserve Bank of India issued directives in December 2025, compelling Authorized Dealers to ensure complete fee transparency for forex transactions. Financial institutions must now disclose all charges and exchange rate markups before a transaction is finalized online. This dual approach tackles the long-standing issue of hidden costs within inflated exchange rates, which traditionally eroded the benefits of any apparent fee reductions.

These measures are projected to impact a substantial segment of the Indian population. Indian students form a significant portion of international student bodies in countries like the US, UK, Canada, and Australia, with projections indicating 800,000 students by 2030 spending an estimated $66 billion annually. Similarly, Indian outbound tourism is experiencing robust growth, with over 31.7 million trips in FY2024-25 alone, exceeding $30 billion in overseas spending.

The government's initiative aims to create a more equitable financial landscape for its citizens participating in global activities. By mandating transparency, the move empowers consumers to make informed decisions, forcing service providers to compete on genuine value rather than opaque pricing strategies. This fosters an environment where fintech innovations offering mid-market rates and upfront fees can thrive across the industry.