India’s Union Budget 2026–27 hands the travel and tourism sector a clear shot in the arm, from training guides to building medical hubs, and from new waterways to seven high-speed rail corridors. Before the Budget, tourism was already recovering strongly: in 2023, the sector contributed over ₹19.13 trillion to India’s GDP and supported about 43 million jobs. The Budget’s measures aim to accelerate this recovery.
Travel & Tourism Highlights from Budget 2026
Here are the quick insights related to travel from Budget 2026:
- A pilot scheme will train 10,000 guides across 20 iconic sites with a standardised 12-week hybrid course run in collaboration with an Indian Institute of Management.
- A new scheme will support states in setting up 5 Regional Medical Hubs (public-private), each with AYUSH centres and Medical Value Tourism Facilitation Centres, to position India as a medical tourism destination.
- The Budget proposes to operationalise 20 National Waterways over the next five years, starting with NW-5 in Odisha, and to build training institutes and a ship-repair ecosystem along these routes to boost inland water transport and improve access to tourism.
- Seven corridors are proposed as “growth connectors." This includes Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Hyderabad–Chennai, Chennai–Bengaluru, Delhi–Varanasi, and Varanasi–Siliguri.
TCS On Overseas Tour Packages Cut To 2%
In the Union Budget 2026–27, the government has reduced the Tax Deducted at Source (TDS) on overseas tour packages to a flat 2%. Earlier, if the package was up to ₹10 lakh, the TCS was 5%. If the amount was over ₹10 lakh, a 20% TCS was applied. This blocked substantial funds upfront when booking holidays abroad.
The new 2% rate applies with no minimum threshold. The purpose of this change is to make international travel more affordable, improve cash flow at the time of booking, and support the travel and tourism sector. The reduced TCS also applies to education and medical remittances abroad under the Liberalised Remittance Scheme (LRS).
Why Travel Insurance Matters More After Budget 2026
Here’s why travel insurance matters even more today:
- Healthcare expenses outside India can be very costly. Travel insurance covers emergency hospitalisation, evacuation, and treatment costs, which might otherwise come from your own savings.
- Even the best-planned trips can be disrupted by illness, weather, or airline changes. A good policy can refund prepaid costs and cover additional expenses.
- Overseas travel carries the risk of lost or delayed baggage and misplaced passports. Insurance can cover these financial and logistical hits.
- Many countries, like Schengen nations, require travel insurance for visa approval. Without it, even with lower TCS costs, your trip could be denied.
How Budget 2026 Could Impact Travel Insurance Segments
With lower TCS on overseas travel payments, more people may travel abroad, increasing the need for travel insurance policies as tourists seek protection.
Also, with government plans to promote tourism and to build travel infrastructure, more domestic and international trips may be taken, driving up insurance purchases.
Opportunities for Travel Insurers Post Budget 2026
Here are some of the key opportunities insurers can grab:
- Insurers can develop tailored policies to meet diverse traveller needs.
- Collaborations with tour operators and online booking portals can boost policy distribution and visibility.
- Digital-first offerings, such as easy online buying, claims, and add-on covers, will attract tech-savvy customers planning travel abroad.
Conclusion
As you plan your trips after Budget 2026, lower TCS and better travel infrastructure give you more freedom to explore, both within India and abroad. With rising overseas travel and medical costs, it makes sense to protect your plans and savings. It is recommended that you choose the right international travel insurance to handle medical emergencies, delays, or losses smoothly, so you can focus on the experience, not unexpected expenses.
FAQs
1. Does Budget 2026 benefit student travellers going abroad?
Yes, under the Budget, the government has reduced the TCS on overseas education remittances under the Liberalised Remittance Scheme from higher rates to 2%, reducing the upfront money students and families must provide when sending funds abroad for tuition, living costs, or blocked accounts
2. What should travellers consider when buying travel insurance in 2026?
Before you buy travel insurance online, check if the policy offers adequate medical cover, trip cancellation and delay protection, baggage loss support, and emergency evacuation. You must also compare plans, read inclusions and exclusions carefully, and buy cover as soon as you book your trip to get maximum protection.
3. Will travel insurance premiums change after Budget 2026?
The Budget did not introduce any specific change to how travel insurance companies price their premiums. Insurers determine the cost based on factors such as destination, trip duration, age, and coverage, not on the Budget.
4. Who benefits the most from travel insurance post Budget 2026?
Post Budget 2026, Indian travellers benefit most from travel insurance when planning overseas trips, as the reduced TCS to 2% lowers upfront costs and improves cash flow.
Disclaimer: The information provided in this blog is for educational and informational purposes only. It may contain outdated data and information regarding the topic featured in the article. It is advised to verify the currency and relevance of the data and information before taking any major steps. ICICI Lombard is not liable for any inaccuracies or consequences resulting from the use of this outdated information.
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