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Informist, Sunday, Feb. 1, 2026

 

--BUDGET: To reduce TCS rate under LRS to 2% for education, medical purposes

--BUDGET: To bring supply of manpower svcs under tax deducted at source

--BUDGET: New foreign asset disclosure scheme for students, young professionals

 

NEW DELHI – The Union Budget for 2026-27 (Apr-Mar) Sunday has reduced the tax collected at source on outward remittances for education and medical treatment to 2%. Earlier, under the liberalised remittance scheme, remittance of an amount or aggregate of amounts exceeding INR 1 million attracted a rate of 5% for tax collection at source. Remittances for purposes other than education and medical treatment will continue to attract a rate of 20%, Finance Minister Nirmala Sitharaman said while presenting the Budget in the Lok Sabha.

 

In addition, the government has reduced the rate for tax collected at source on sale of overseas tour programme packages from the current 5% and 20% to 2% without any stipulation of amount. The sale of "overseas tour programme package" includes expenses for travel, hotel stay or boarding and lodging, or similar expenditure.

 

The government has brought supply of manpower services within the ambit of payment to contractors for the purpose of tax deducted at source to avoid ambiguity. Thus, tax deducted at source on these services will be at the rate of 1% or 2% only, the government said.

 

The Budget has also brought a scheme for small taxpayers wherein a rule-based automated process will enable obtaining lower or nil deduction certificate instead of filing an application with the assessing officer. The payee will be given an online option that will ease the compliance burden on it and other small taxpayers, according to the Budget. 

 

In another relief for small taxpayers like students, young professionals, employees in the technology industry, and relocated non-resident Indians, the government has introduced a one-time six-month foreign asset disclosure scheme to disclose income or assets below a certain size. This scheme would be applicable in two categories--those who did not disclose their overseas income or assets and those who disclosed their overseas income and paid the tax due but did not declare assets acquired.

 

For the first category, the limit of undisclosed income or assets is proposed to be up to INR 10 million and they will need to pay 30% of the fair market value of assets or 30% of undisclosed income as tax and 30% as additional income tax in lieu of penalty. This payment will bring them immunity from prosecution. For those in the second category, who had disclosed their income, the asset value is proposed to be up to INR 50 million, the government said. Here, immunity from penalty and prosecution will be available with the payment of a fee of INR 100,000, it added.  End

 

Reported by Surya Tripathi

Edited by Rajeev Pai

 

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