What are the proposed TCS rate changes in Budget 2026-27?

The Union Budget 2026-27 proposes to reduce TCS rates on tendu leaves, foreign education, and medical treatments to 2%, while increasing the rate on scrap and minerals to 2%.

How will the TCS changes affect overseas travel and education expenses?

The TCS rate for overseas tour packages and remittances for education or medical treatment exceeding ₹10 lakh has been reduced to 2%, offering significant relief to families.

Will all TCS rates be reduced in the Union Budget 2026-27?

No, while TCS rates on specific items like tendu leaves, foreign education, and overseas tour packages are reduced, the rates on the sale of scrap and minerals are proposed to be increased to 2%.

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Budget 2026: Major TCS Rate Cuts Announced

1 Feb

Summary

TCS rates reduced for tendu leaves, foreign education, and medical treatment.
Scrap and mineral sales will see an increased TCS rate to 2%.
Overseas tour packages now attract a reduced 2% TCS rate.

Budget 2026: Major TCS Rate Cuts Announced

In the Union Budget 2026-27, Finance Minister Nirmala Sitharaman proposed a comprehensive restructuring of the Tax Collected at Source (TCS) system.

The overhaul aims to simplify compliance by reducing the number of different TCS rates and rationalizing them for specific goods and services. This move is intended to lessen the upfront financial strain on taxpayers and reduce cash outflow.

Notable reductions include the TCS rate on tendu leaves falling from 5% to 2% and a significant cut for remittances under the Liberalised Remittance Scheme (LRS) for education or medical treatment. Amounts exceeding ₹10 lakh for these purposes will now attract a 2% TCS, down from 5%.

Furthermore, the TCS rate for overseas tour packages, encompassing travel and accommodation expenses, has been reduced to 2% for amounts up to ₹10 lakh, and also to 2% for amounts exceeding ₹10 lakh, a substantial decrease from the previous 20%. Conversely, the TCS on the sale of scrap and certain minerals like coal and lignite will be hiked from 1% to 2%.

These proposed changes are expected to provide substantial relief to families funding overseas education and medical needs, while also making international travel more affordable by lowering upfront tax liabilities.

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