Union Budget 2026: Relief on overseas education & medical remittances as TCS cut to 2%

Finance Minister Nirmala Sitharaman announced significant tax relief while presenting the Union Budget 2026, reducing the Tax Collected at Source (TCS) on overseas education and medical expenses.

The TCS rate under the Liberalised Remittance Scheme (LRS) for education and healthcare has been cut from 5% to 2%, offering substantial savings to families sending money abroad.

The reduced TCS applies to remittances exceeding ₹10 lakh. Earlier, a 5% levy was applicable on amounts beyond this threshold.

For instance, on a remittance of ₹20 lakh, the TCS burden earlier stood at ₹1 lakh, which will now come down to ₹40,000 — translating into a direct saving of ₹60,000. The benefit is available when a PAN card is provided; without PAN, the tax rate can be higher.

The finance minister also extended similar relief to overseas medical expenses, reducing TCS from 5% to 2%. This is expected to lower the cost burden for patients seeking treatment abroad and make cross-border medical care relatively more affordable.

The Budget also brings relief for foreign travellers, with a reduction in taxes and customs-related TCS on overseas travel expenses. This is expected to lower the cost of international travel and holiday packages, which earlier attracted higher tax outgo.