Indian taxpayers have updated tax compliance framework as per the new Income-Tax Act 2025 and I-T Rules 2026, which came into effect on 1 April. The changes aim to expand digital reporting, make the tax administration more transparent for individuals and businesses, and streamline tax filing processes.
Notably, one part of the changes includes overhaul of the Tax Collected at Source (TCS) and Tax Deducted at Source (TDS) systems. The updates seek to avoid mismatches, ensure faster processing time, reduce manual errors, and save time, as per a I-T Department notice earlier in the month.
ICICI revises TCS charges for customers: Check details
ICICI Bank in a notice said that it is revising charges for TCS in line with changes announced for remittances for education and medical treatment under RBI’s Liberalised Remittance Scheme (LRS). The rate has been cut from 5% to 2% above value of ₹10 lakh, with effect from 1 April.
Check below table for the TCS applicable:
| Nature of payment | TCS prior to 1 April 2026 | TCS after 1 April 2026 |
|---|---|---|
| Remittance for education financed by loan | No TCS applicable | No TCS applicable |
| Remittance for education / medical treatment (financed by other than loan) | NIL upto ₹10 lakh, 5% above ₹10 lakh | NIL upto ₹10 lakh, 2% above ₹10 lakh |
| Remittance for other purposes | NIL upto ₹10 lakh, 20% above ₹10 lakh | NIL upto ₹10 lakh, 20% above ₹10 lakh |
| Source: ICICI Bank, rates effective from 1 April 2026 | ||
HDFC Bank revises TCS on LRS Transactions: How they impact you
HDFC Bank in a notice on its website noted that it has revised TCS charges on the Liberalised Remittance Scheme (LRS), effective from 1 April 2026. LRS is a facility where all resident individuals are allowed to freely remit up to $2,50,000 each financial year for current or capital account transaction or a combination of both.
| Revision in TCS on LRS Transactions | ||
|---|---|---|
| Purpose of remittance abroad | New TCS rate | |
| LRS for education purpose, if the amount being remitted is from education loan obtained from a specified institution | NIL | NIL |
| LRS for the purpose of education, other than (1) above (or) for the purpose of medical treatment. | Upto ₹10 lakh: NIL | Upto ₹10 lakh: NIL |
| Above ₹10 lakh: 5% | Above ₹10 lakh: 10% | |
| Any other purpose under LRS | Upto ₹10 lakh: NIL | Upto ₹10 lakh: NIL |
| Above ₹10 lakh: 20% | Above ₹10 lakh: 20% | |
| Overseas tour packages | Upto ₹10 lakh: 5% | Upto ₹10 lakh: 10% |
| Above ₹10 lakh: 20% | Above ₹10 lakh: 20% | |
| Source: HDFC Bank, all charges effective 1 April 2026 | ||
What are the changes in TCS rules?
For TCS, the Centre has cut rates in a bid to ease upfront tax burden on individuals with the changes expected to give households and travelers relief, while maintaining visibility for the tax authorities.
New Mandatory Disclosures: Among the new changes includes replacing Form 3CD (the tax audit report) with Form 26. Notably, TCS disclosure, which was Clause 34 in the old form, is now spread across Clauses 49, 50, and 51 with a dedicated Schedule, according to Clear Tax.
The shift reflects quantitative accountability instead of qualitative declarations in tax audits, it added. A major change is in the new equivalent of Clause 34(b), which now requires:
- Total number of TCS transactions reported in returns
- Total number of transactions NOT reported (previously a Yes/No tick; now an exact count)
- Monetary amount attributable to unreported transactions
TCS correction statement: Further, the TCS correction statement filing window has been reduced to two years from the end of the financial year in which the original statement was due.
TCS rates — Changes effective from 1 April 2026
- Foreign travel packages: Such deals will now be taxed at a flat 2% rate, replacing the earlier applicable rate of 5% (up to ₹10 lakh) and 20% for amounts above the ₹10 lakh threshold.
- Medical and education remittances abroad: TCS has been reduced from 5% to 2% on applicable amounts. Check table below for full comparison:
| Category | Old Rate | New Rate |
|---|---|---|
| Alcoholic liquor | 1% | 2% |
| Scrap | 1% | 2% |
| Coal, lignite, iron ore | 1% | 2% |
| Tendu leaves | 5% | 2% |
| LRS – education and medical | 5% (above ₹10 lakh) | 2% |
| Overseas tour packages | 5% up to ₹10 lakh / 20% above ₹10 lakh | Flat 2% |
| Source: Clear Tax, rates effective from 1 April 2026 | ||
Clear Tax noted that the flat 2% on overseas tour packages replaces the slab structure, while removal of 20% rate for packages over ₹10 lakh addresses a “real operational pain point” for corporate booking group tours and travel agents.
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