Indian tourists travelling overseas will have more money to spend, as their upfront cost will drop with the budget proposing to cut the tax collected at source (TCS) on foreign tour packages to a flat 2% from as high as 20%.
Proposals to develop seven high-speed rail corridors and 15 archaeological sites, and create a national digital repository for destinations are expected to help boost domestic tourism and the local travel and hospitality industry.
Finance minister Nirmala Sitharaman proposed to cut the TCS rate on the sale of overseas tour packages to 2% without any stipulation of the amount. Currently, packages up to Rs 10 lakh are taxed at 5%; for costlier packages, the levy is 20%.
Rationalisation of TCS addresses the upfront cost on outbound Indian travellers, said Rajesh Magow, cofounder and group CEO of travel portal MakeMyTrip. Siddhartha Gupta, CEO of Yatra Online, said the TCS cut and connectivity projects including the rail corridors will bring smaller cities into the mainstream of business and leisure travel.
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India Budget 2026 Key Takeaways: Trains, treks, chips and coconuts get big mentions
The budget also focuses on skilling and job creation in the sector.
The minister proposed setting up a National Institute of Hospitality by upgrading the existing National Council for Hotel Management & Catering Technology. She said it will function as a bridge linking academia, industry and the government.
Other proposals include a pilot scheme for upskilling 10,000 guides in 20 iconic tourist sites in collaboration with an Indian Institute of Management.
There is a need to create more job-ready people and structured collaborations between the industry and academia should aid job creation, said KB Kachru, president of the Hotel Association of India.
Budget 2026 Decoded: Your 2-minute guide to becoming a Budget pro
The minister said the government will develop ecologically sustainable mountain trails in Himachal Pradesh, Uttarakhand and Jammu and Kashmir, turtle trails in the coastal areas of Odisha, Karnataka and Kerala, and bird watching trails along the Pulicat lake in Andhra Pradesh and Tamil Nadu.
Kachru, however, said the long-standing demand to provide a comprehensive infrastructure status to the industry "remains unmet."
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Finance minister Nirmala Sitharaman proposed to cut the TCS rate on the sale of overseas tour packages to 2% without any stipulation of the amount. Currently, packages up to Rs 10 lakh are taxed at 5%; for costlier packages, the levy is 20%.
Rationalisation of TCS addresses the upfront cost on outbound Indian travellers, said Rajesh Magow, cofounder and group CEO of travel portal MakeMyTrip. Siddhartha Gupta, CEO of Yatra Online, said the TCS cut and connectivity projects including the rail corridors will bring smaller cities into the mainstream of business and leisure travel.
(Join our ETNRI WhatsApp channel for all the latest updates)
India Budget 2026 Key Takeaways: Trains, treks, chips and coconuts get big mentions
The budget also focuses on skilling and job creation in the sector.
The minister proposed setting up a National Institute of Hospitality by upgrading the existing National Council for Hotel Management & Catering Technology. She said it will function as a bridge linking academia, industry and the government.
Other proposals include a pilot scheme for upskilling 10,000 guides in 20 iconic tourist sites in collaboration with an Indian Institute of Management.
There is a need to create more job-ready people and structured collaborations between the industry and academia should aid job creation, said KB Kachru, president of the Hotel Association of India.
Budget 2026 Decoded: Your 2-minute guide to becoming a Budget pro
The minister said the government will develop ecologically sustainable mountain trails in Himachal Pradesh, Uttarakhand and Jammu and Kashmir, turtle trails in the coastal areas of Odisha, Karnataka and Kerala, and bird watching trails along the Pulicat lake in Andhra Pradesh and Tamil Nadu.
Kachru, however, said the long-standing demand to provide a comprehensive infrastructure status to the industry "remains unmet."