Overseas travel & education to get cheaper; alcohol, umbrellas offer limited relief

Finance Minister Nirmala Sitharaman on Sunday announced a series of tax and duty changes in the Union Budget that could make overseas travel, education and several essential imports cheaper, while selectively raising costs for certain consumer and industrial goods.

As part of the proposals, the tax collected at source (TCS) on overseas tour packages has been sharply reduced to 2 per cent, from the earlier range of 5–20 per cent, offering immediate relief to outbound travellers. In addition, TDS under the Liberalised Remittance Scheme (LRS) for foreign education-related expenses has been lowered, easing the financial burden on students and their families.

To accelerate India's energy transition, the government has fully exempted basic customs duty (BCD) on energy transition equipment and solar glass inputs, a move expected to reduce project costs and encourage domestic manufacturing.

In a push to strengthen strategic and high-value manufacturing, BCD exemptions have also been extended to parts and components used in civilian aircraft manufacturing, as well as imports required for nuclear power projects.

Healthcare emerged as another key beneficiary, with the government fully exempting BCD on drugs used for rare diseases and cancer, a measure expected to lower treatment costs. The budget also offered relief to the fisheries sector by exempting BCD on fish catch brought in by Indian fishermen operating in Indian waters, supporting livelihoods and reducing operational expenses.

What gets costlier?
Not all segments benefited from the tax rationalisation. The budget proposed an increase in TCS on alcoholic liquor to 2 per cent from 1 per cent, a move likely to push up prices. TCS on the sale of scrap and select minerals, including coal, lignite and iron ore, has also been raised to 2 per cent.

Under the revised customs duty structure, potassium hydroxide- a key chemical used in soaps, detergents and batteries- will attract a 7.5 per cent BCD, up from nil earlier. The change is expected to raise input costs for manufacturers reliant on imports.

In the consumer goods segment, the customs duty on umbrellas (excluding garden umbrellas) has been modified to include a minimum specific duty. While the headline rate remains unchanged at 20 per cent, imports will now attract 20 per cent or ₹60 per piece, whichever is higher.

Similarly, parts, trimmings and accessories of umbrellas will now attract 10 per cent duty or ₹25 per kg, whichever is higher, compared with the earlier flat 10 per cent rate- potentially increasing costs and curbing under-invoicing.