Why International Travel May Become More Affordable After Union Budget 2026
The Union Budget 2026–27, presented by Finance Minister Nirmala Sitharaman, has brought exciting news for travel enthusiasts across India. At the heart of this year’s budget lies a significant move to make international travel more accessible and cost-effective for Indian tourists. By introducing a major reduction in the Tax Collected at Source (TCS) on overseas tour packages , the government is clearly signalling its support for the travel industry and the growing aspirations of global travellers.
In a game-changing move, the Finance Minister announced a flat TCS rate of just 2% on all overseas tour packages. This uniform reduction means travellers will pay considerably less tax upfront, making international holidays more affordable. The simplified tax system will also help streamline travel expenses and reduce financial friction for both consumers and travel operators.
Similarly, ixigo’s leadership praised the budget’s efforts to make both outbound and inbound international travel more accessible for Indians. The flat 2% TCS rate on overseas packages was described as a “welcome move” that will positively impact outbound tourism .
Aviral Gupta, CEO of Zostel & Zo World, highlighted how these efforts will not only simplify outbound travel but also elevate the value of tourism in India, boosting both inbound and outbound journeys.
With these progressive changes, international travel from India looks set to become more affordable, accessible, and enjoyable, paving the way for a booming travel industry and richer cultural exchanges worldwide.
How the Union Budget 2026 Cuts the Cost of International Travel
Previously, Indian travellers booking overseas tour packages had to pay TCS at a tiered rate: 5% on packages costing up to ₹10 lakh and a steep 20% on amounts above that threshold. This structure often made international vacations expensive, especially for high-value bookings.In a game-changing move, the Finance Minister announced a flat TCS rate of just 2% on all overseas tour packages. This uniform reduction means travellers will pay considerably less tax upfront, making international holidays more affordable. The simplified tax system will also help streamline travel expenses and reduce financial friction for both consumers and travel operators.
Industry Experts Welcome the TCS Rationalisation
The sharp drop in TCS has been widely applauded by travel industry leaders. Kunal Gala, Partner at BDO India, explained that this cut will act as an immediate boost for the travel sector, improving cash flow for consumers and businesses alike. It also highlights the government’s commitment to supporting legitimate travel spending while encouraging a formal and transparent travel economy.Similarly, ixigo’s leadership praised the budget’s efforts to make both outbound and inbound international travel more accessible for Indians. The flat 2% TCS rate on overseas packages was described as a “welcome move” that will positively impact outbound tourism .
Boosting Affordability Through Technology
The Budget doesn’t stop at tax reforms; it also champions technology-driven improvements in the travel ecosystem. Hari Ganapathy, Co-Founder of Pickyourtrail, pointed out that embracing tech-enabled governance along with the TCS reduction will enhance transparency, ease of booking, and overall affordability. These digital measures are expected to simplify the travel experience for millions of Indian consumers venturing abroad.Tourism as a Strategic Economic Driver
Beyond making international travel cheaper, the Union Budget 2026 underscores tourism’s growing role as a strategic economic sector. The government’s focus on quality experiences is evident through initiatives like training 10,000 certified tourist guides, investing in hospitality education, and upgrading 15 archaeological and cultural sites into immersive destinations.Aviral Gupta, CEO of Zostel & Zo World, highlighted how these efforts will not only simplify outbound travel but also elevate the value of tourism in India, boosting both inbound and outbound journeys.
Positive Ripple Effects on Local Economies
The hospitality and travel service sectors stand to gain significantly from these budgetary measures. Experts like Ayu Tripathi, Director of Aahana Resort, anticipate that lower TCS rates, enhanced airport processes, and improved hospitality training will raise the quality of guest experiences. This is expected to encourage more travel spending, benefiting both Indian travellers and local service providers.A Bright Future for Indian Outbound Travel
India’s outbound travel market has expanded rapidly over the past decade, with over 10 million Indians travelling abroad annually for leisure, business, education, and more. The Budget’s reduction of the TCS on overseas packages to 2% removes a major financial barrier, encouraging even more first-time and frequent travellers to explore global destinations.With these progressive changes, international travel from India looks set to become more affordable, accessible, and enjoyable, paving the way for a booming travel industry and richer cultural exchanges worldwide.
Next Story