Union Budget 2026
Key Provisions for NRIs and Non-Residents
Introduction
India’s Union Budget has a direct impact not only on residents of India, but also on Non-Resident Indians (NRIs) and overseas Indians who maintain financial, property, or investment links with the country.
Union Budget 2026 focuses on simplifying tax compliance, improving investment access, and reducing long-standing operational difficulties faced by NRIs.
This document is designed for teaching–learning purposes for students, professionals working in taxation or finance, and NRIs seeking clarity.
1. Higher Investment Limits for NRIs in Indian Equities
- Individual NRI / PROI investment limit increased from 5% to 10% in a listed Indian company
- Aggregate NRI holding limit increased from 10% to 24%
- Applies under the Portfolio Investment Scheme (PIS)
This change allows NRIs to play a stronger role in Indian equity markets while supporting stable foreign capital inflows.
2. Direct Equity Investment Route for NRIs
- NRIs can invest directly in Indian equities through a simplified PIS route
- Reduced reliance on indirect investment structures
- Applicable to NRIs and PIOs classified as Persons Resident Outside India (PROI)
The measure improves ease of investing and reduces procedural complexity for overseas investors.
3. TAN Requirement Removed for NRI Property Sales
- Resident buyers purchasing property from NRIs are no longer required to obtain a TAN
- TDS compliance becomes faster and more straightforward
- Reduces transaction delays and legal confusion
This addresses one of the most common compliance issues faced by NRIs selling property in India.
4. Simplified TDS Process for NRI Property Transactions
- Responsibility for TDS deduction clearly placed on the resident buyer
- Simplified procedures for:
- Sale of inherited property
- Sale of long-held NRI assets
This provides major relief to NRIs managing transactions from abroad.
5. MAT (Minimum Alternate Tax) Exemption for Non-Residents
- Non-residents exempted from MAT on income arising from:
- Capital gains
- Interest income
- Royalties and technical service fees
The exemption removes ambiguity and reduces tax-related litigation for foreign taxpayers.
6. One-Time Foreign Asset Disclosure Scheme
- Limited-period window for voluntary disclosure of overseas assets
- Covers foreign bank accounts, financial assets, and other holdings
- Designed to reduce penalties and encourage compliance
This is especially relevant for returning NRIs and long-term emigrants.
7. Lower TCS on Overseas Spending
- TCS on foreign remittances and overseas tour packages reduced to 2%
- Earlier rates ranged from 5% to 20%
- Applicable to travel, education, and medical expenses
- No minimum threshold restriction
This reduces the upfront tax burden on genuine overseas spending.
8. Five-Year Tax Exemption for Certain Non-Residents
- Five-year income tax exemption for non-residents supplying:
- Capital goods
- Machinery and equipment
- Technical know-how
- Applicable when supplying to small Indian manufacturers
The objective is to encourage technology transfer and strengthen India’s MSME sector.
9. Extended Time to Update Income Tax Returns
- NRIs allowed to update or revise ITRs even after reassessment
- Additional tax payable capped at 10%
- Useful for correcting past filing or disclosure errors
10. New Income Tax Act (Effective from 1 April)
- New Income Tax Act to come into force from 1 April
- Expected to simplify residency rules
- Aims to reduce interpretation disputes and clarify cross-border taxation
Who Is Covered Under These Provisions?
- Non-Resident Indians (NRIs)
- Persons of Indian Origin (PIOs)
- Persons Resident Outside India (PROI) under FEMA
- Overseas Indians holding Indian financial assets or property