Sending ₹30 lakh abroad? A 3% forex markup may cost you ₹90,000
Under the revised rules, remittances exceeding ₹10 lakh for education and medical purposes are now subject to a reduced 2% TCS, down from earlier higher rates. Overseas tour packages are also taxed at a uniform 2% from the first rupee, replacing the earlier slab-based system.
- Apr 4, 2026,
- Updated Apr 4, 2026 2:11 PM IST
Tax rules 2026: The government’s decision to reduce Tax Collected at Source (TCS) on select foreign remittances to a flat 2% is now in effect, offering relief to Indian students and international travellers. Announced in Budget 2026, the revised framework simplifies taxation under the Liberalised Remittance Scheme (LRS) and reduces the upfront financial burden on those sending money abroad.
Under the new rules, remittances for education and medical purposes above ₹10 lakh now attract a lower TCS rate of 2%, compared to earlier higher rates. Additionally, overseas tour packages are taxed at a flat 2% from the first rupee, replacing the previous slab-based structure.
Relief for students and families
The biggest impact is visible for Indian students studying overseas. Previously, a family remitting ₹30 lakh for tuition fees would have seen ₹1.5 lakh deducted upfront as TCS at 5%. Under the revised structure, this drops significantly to ₹60,000, freeing up ₹90,000 in immediate liquidity.
This difference can be substantial for families managing high international education costs. The freed-up amount can help cover accommodation, food, insurance, or other living expenses. While TCS is adjustable against final tax liability and can be claimed as a refund, the earlier higher rates often created short-term cash flow pressure.
ALSO READ: Got an income tax notice? What you must check before trusting any tax notice
Simplified taxation for travellers
For outbound travellers, the shift to a flat 2% TCS brings predictability. Earlier, varying tax slabs made it difficult to estimate total travel costs. Now, travellers can factor in a uniform rate at the time of booking, improving budgeting and financial planning.
However, the benefits are limited to specific categories. Other remittances such as overseas investments, gifts, or maintenance of relatives, continue to be taxed under existing TCS rates, meaning the relief is targeted rather than universal.
Experts flag hidden costs
Despite the reduction in TCS, experts caution that the total cost of remittance goes beyond tax. Taneia Bhardwaj, South Asia Expansion Lead at Wise, highlighted the impact of exchange rate markups.
“A reduction in TCS to 2% is a meaningful shift for Indian consumers sending money overseas, particularly for education and travel. However, consumers must look beyond the headline rate. On a ₹30 lakh transfer, even a 3% exchange rate markup can cost ₹90,000, effectively cancelling out the benefit,” she said.
She added that individuals should benchmark exchange rates against the mid-market rate and choose providers that offer transparent pricing and clear cost visibility.
ALSO READ: March vs April salary 2026: Which Income Tax law applies to your paycheck this month?
Cross-border payments
The revised framework also aligns with a broader regulatory push toward transparency and efficiency in cross-border payments. As Bhardwaj noted, clearer pricing structures will help consumers make better financial decisions while driving competition among service providers.
As awareness increases, consumers are expected to shift focus from just low headline costs to total transaction value, including exchange rates and fees.
Improved cash flow, better planning
Overall, the TCS cut improves liquidity for individuals sending money abroad, especially students and travellers managing large expenses. While it does not eliminate tax liability, it reduces the upfront burden and simplifies compliance.
With overseas education and travel demand rising steadily, the new TCS regime is expected to support better financial planning while encouraging more transparent and cost-efficient international transactions.
Tax rules 2026: The government’s decision to reduce Tax Collected at Source (TCS) on select foreign remittances to a flat 2% is now in effect, offering relief to Indian students and international travellers. Announced in Budget 2026, the revised framework simplifies taxation under the Liberalised Remittance Scheme (LRS) and reduces the upfront financial burden on those sending money abroad.
Under the new rules, remittances for education and medical purposes above ₹10 lakh now attract a lower TCS rate of 2%, compared to earlier higher rates. Additionally, overseas tour packages are taxed at a flat 2% from the first rupee, replacing the previous slab-based structure.
Relief for students and families
The biggest impact is visible for Indian students studying overseas. Previously, a family remitting ₹30 lakh for tuition fees would have seen ₹1.5 lakh deducted upfront as TCS at 5%. Under the revised structure, this drops significantly to ₹60,000, freeing up ₹90,000 in immediate liquidity.
This difference can be substantial for families managing high international education costs. The freed-up amount can help cover accommodation, food, insurance, or other living expenses. While TCS is adjustable against final tax liability and can be claimed as a refund, the earlier higher rates often created short-term cash flow pressure.
ALSO READ: Got an income tax notice? What you must check before trusting any tax notice
Simplified taxation for travellers
For outbound travellers, the shift to a flat 2% TCS brings predictability. Earlier, varying tax slabs made it difficult to estimate total travel costs. Now, travellers can factor in a uniform rate at the time of booking, improving budgeting and financial planning.
However, the benefits are limited to specific categories. Other remittances such as overseas investments, gifts, or maintenance of relatives, continue to be taxed under existing TCS rates, meaning the relief is targeted rather than universal.
Experts flag hidden costs
Despite the reduction in TCS, experts caution that the total cost of remittance goes beyond tax. Taneia Bhardwaj, South Asia Expansion Lead at Wise, highlighted the impact of exchange rate markups.
“A reduction in TCS to 2% is a meaningful shift for Indian consumers sending money overseas, particularly for education and travel. However, consumers must look beyond the headline rate. On a ₹30 lakh transfer, even a 3% exchange rate markup can cost ₹90,000, effectively cancelling out the benefit,” she said.
She added that individuals should benchmark exchange rates against the mid-market rate and choose providers that offer transparent pricing and clear cost visibility.
ALSO READ: March vs April salary 2026: Which Income Tax law applies to your paycheck this month?
Cross-border payments
The revised framework also aligns with a broader regulatory push toward transparency and efficiency in cross-border payments. As Bhardwaj noted, clearer pricing structures will help consumers make better financial decisions while driving competition among service providers.
As awareness increases, consumers are expected to shift focus from just low headline costs to total transaction value, including exchange rates and fees.
Improved cash flow, better planning
Overall, the TCS cut improves liquidity for individuals sending money abroad, especially students and travellers managing large expenses. While it does not eliminate tax liability, it reduces the upfront burden and simplifies compliance.
With overseas education and travel demand rising steadily, the new TCS regime is expected to support better financial planning while encouraging more transparent and cost-efficient international transactions.