Budget 2026 cut TCS to 2% for education, medical treatment and overseas tour packages from 1 April 2026. Most calculators online still show the old 5% and 20% figures. Education funded by a loan is nil.
TCS is not a cost. It is tax paid in advance — you claim it back at filing.
Budget 2026 reduced TCS on LRS remittances for education, medical treatment and overseas tour packages to 2% with effect from 1 April 2026. Before that, education and medical were 5% above the threshold, and tour packages ran 5% up to ₹10 lakh then 20% above. If a calculator is still showing you 5%, it is out of date.
Overseas tour packages now attract a flat 2% with no threshold at all — TCS applies from the first rupee. That is a large reduction at the top end (20% became 2%) but a small new cost at the bottom, where a ₹2 lakh package previously fell under the limit and now attracts ₹4,000.
Where the remittance is funded by a loan from a specified financial institution, TCS is nil at any amount. The earlier 0.5% concessional rate was removed entirely from 1 April 2025 — not reduced, removed. Keep the loan sanction letter with your remittance paperwork.
It is a pre-paid tax. It shows in your Form 26AS / AIS (now Form 168), it is adjustable against your total tax liability, and if it exceeds your liability you get it back as a refund. The real cost is cash flow — your money sits with the government until you file. The provision is now Section 394(1) of the Income-tax Act 2025 (formerly 206C(1G)).
The calculator does the arithmetic. TaxSphere — our free case-law library, 1,184 authorities and the Act in full — has the judgments, the circulars and the statutory text for the same provision.
