TCS at 2% sparks rise in overseas travel enquiries, lifts interest in Bali, Krabi, Oman

A lower TCS could also translate into more premium packages as Indian travellers are already preferring shelling out more to upgrade their international trips.

• Budget 2026 lowers TCS on overseas tour packages to 2 percent, boosting bookings
• Travel demand rises for Southeast Asia, Middle East, and Europe
• India's outbound tourism to grow 11.4% CAGR, hitting $55.38 billion.

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Budget 2026 has made overseas holidays a little lighter on the wallet with Indians showing fresh appetite for overseas trips, prompting travel companies to brace for a surge in outbound bookings.

Ahead of 2 percent tax collected at source (TCS) on overseas tour packages coming into effect in April, Pickyourtrail co-founder Hari Ganapathy has already seen a 35 percent increase in bookings for April.

Since the lower TCS announcement in the Budget 2026, WanderOn CEO Govind Gaur has seen a 4 percent uptick in both enquiries and confirmed bookings for international destinations in the last few days. "With Valentine's Day round the corner, we are looking at the demand increase by another 8-10 percent."

There is a growing interest in destinations across Southeast Asia and the Middle East such as Thailand, Vietnam, Sri Lanka, Indonesia, Singapore, Oman, and the UAE, alongside emerging favourites like Turkey, Georgia, Azerbaijan, and parts of Eastern Europe, Ganapathy noted.

The lower TCS has helped reduce initial booking hesitation especially for the above mentioned destinations, allowing travellers to convert intent into confirmed plans more decisively, he added.

Gaur on his platform is getting more enquiries for Bali- Indonesia, Phuket and Krabi- Thailand, Maldives, Mauritius, Dubai and Oman, Mediterranean coast in Europe.

FM's announcement

Finance Minister Nirmala Sitharaman in her Budget 2026 speech had said, "I propose to reduce TCS rate on the sale of overseas tour program package from the current 5 percent and 20 percent to 2 percent without any stipulation of amount."

Travel executives pointed out that by reducing the upfront cash outflow at the time of booking, the lower TCS makes international travel feel more financially accessible, particularly for families and first-time travellers.

This improvement in affordability is likely to strengthen booking sentiment, extend demand beyond peak travel periods, and, over time, encourage more frequent international travel and broader destination exploration among Indian travellers.

 More Indians holidaying abroad

According to Ganapathy, India’s outbound travel demand has remained steady over the past year, and the move to a flat 2 percent TCS is expected to give this momentum an additional push.

He expects the policy change could drive an estimated 15–20 percent growth in international travel volumes over the next 6–12 months.

Gaur's assessment is that the lower tax will catalyse planning and conversions especially for Q2-Q4 2026 departures. "We will witness more demand, as travel planning will increase towards summer, festive holidays, weekend getaways, year end travel."

He called the recent TCS reduction one of the most significant policy levers we have seen to boost outbound travel. "It will boost travel aspirations for middle-income, young travellers, aspirational travellers and people in the smaller cities in India. More families and first-time international travellers can commit to bookings without cash flow anxiety," Gaur added.

Premium packages

A lower TCS could also translate into more premium packages as Indian travellers are already preferring shelling out more to upgrade their international trips.

The shift towards luxury and experience-led travel is clearly visible in current booking patterns, with 30–32 percent of travellers already showing a preference for premium inclusions such as luxury accommodations, unique experiences, and multi-city itineraries, Ganapathy said.

"Indian travellers are more open to upgrading their trips, whether that means better hotels, longer stays, or more immersive, personalised experiences. And the move to a flat 2 percent TCS is expected to further reinforce this behaviour and we expect this inclination towards premium, experience-rich itineraries to strengthen further once the policy takes effect," he added.

Nowadays, Indian travellers are increasingly prioritising experiential travel and showing a growing preference for more premium, well-curated holidays, Ganapathy said.

Growing outbound market

Ministry of Tourism's data shows a record 3.89 crore Indians that travelled abroad in 2024, marking a 10.79 percent increase over the previous year.

India's outbound tourism market is expected to grow at a Compound Annual Growth Rate (CAGR) of 11.4 per cent in the decade between 2024 and 2034 to reach approximately $55.38 billion, according to a FICCI knowledge paper.

By 2027, India is expected to become the fifth largest outbound market, up from tenth in 2019.