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The Union Budget 2026 brings relief for Indians sending money abroad and for businesses. Finance Minister Nirmala Sitharaman announced that the Tax Collected at Source (TCS) under the Liberalised Remittance Scheme (LRS) for education and medical expenses abroad will be reduced from 5% to 2%.
This makes it easier for families to fund overseas studies or medical treatments.
The Budget also clarified tax rules for businesses providing manpower services. Such payments will now clearly fall under contractor payments, resulting in a Tax Deducted at Source (TDS) rate of just 1% or 2%.
This simplification reduces tax friction for companies and workers, ensuring smoother compliance.
(Join our ETNRI WhatsApp channel for all the latest updates)
To support overseas education, last year’s Budget had removed Tax Collected at Source on education loans taken under the Liberalised Remittance Scheme. Families sending money abroad for education through approved loans no longer face TCS, reducing the cost of foreign education for Indian students. The limit for tax-free family remittances under LRS was raised. Individuals can transfer up to Rs. 10 lakh to family members abroad without TCS. Transfers above this limit will attract TCS at 20 percent of the excess amount.
A key change for NRIs last year was the revised residency rule. Indian citizens earning more than Rs. 15 lakh from Indian sources are now treated as residents if they stay in India for 120 days or more in a financial year. Earlier, the limit was 182 days. This brought more high-income NRIs under Indian tax laws.
The previous budget had also tightened global income taxation. Indian citizens who are not taxed in any other country will be deemed residents of India, making their global income taxable in India. The move was aimed at preventing tax avoidance and widening the tax base.
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The Budget also clarified tax rules for businesses providing manpower services. Such payments will now clearly fall under contractor payments, resulting in a Tax Deducted at Source (TDS) rate of just 1% or 2%.
This simplification reduces tax friction for companies and workers, ensuring smoother compliance.
(Join our ETNRI WhatsApp channel for all the latest updates)
To support overseas education, last year’s Budget had removed Tax Collected at Source on education loans taken under the Liberalised Remittance Scheme. Families sending money abroad for education through approved loans no longer face TCS, reducing the cost of foreign education for Indian students. The limit for tax-free family remittances under LRS was raised. Individuals can transfer up to Rs. 10 lakh to family members abroad without TCS. Transfers above this limit will attract TCS at 20 percent of the excess amount.
A key change for NRIs last year was the revised residency rule. Indian citizens earning more than Rs. 15 lakh from Indian sources are now treated as residents if they stay in India for 120 days or more in a financial year. Earlier, the limit was 182 days. This brought more high-income NRIs under Indian tax laws.
The previous budget had also tightened global income taxation. Indian citizens who are not taxed in any other country will be deemed residents of India, making their global income taxable in India. The move was aimed at preventing tax avoidance and widening the tax base.