Union Budget 2026‑27: Major NRI‑Focused Changes...!

Union Budget 2026‑27: Major NRI‑Focused Changes...!

CA R Jegadeesh, Founder Partner,

Jegadeesh & Jefferson chartered Accountants

1 Simplified Tax Compliance & New Income-Tax Framework

One of the biggest structural changes in Budget 2026-27 is the rollout of the new Income Tax Act, 2025 from April 1, 2026.

What’s changed for NRIs:

· The income-tax law is now reorganised to reduce ambiguity and litigation. Tax rates largely remain similar, but the framework is simpler and more transparent for NRIs to comply with.

· No direct new reductions in tax slabs solely speciﬁc to NRIs — but the new Act reduces tax law complexity which benefits expatriates managing Indian taxes from abroad.

Practical takeaway: If you invest, earn rental income, or sell assets in India, you’ll find tax compliance easier under the updated structure, with fewer technical hurdles and clearer rules.

2 Property Transaction Rules Made Easier

From a property standpoint, the Budget delivers one of the most meaningful reforms for NRIs:

PAN-Based TDS Instead of TAN Requirement.

Previously, buyers needed a TAN (Tax Deduction and Collection Account Number) to deduct TDS on property purchased from an NRI. That was a costly compliance step that held up transactions.

Budget 2026 removes this:
👉 Now resident buyers can use their PAN to deposit TDS on property purchased from an NRI.

What it means:

· Faster, smoother property closing — no last-minute delays for TAN registration

· Reduced paperwork and compliance cost

· Easier involvement of individual buyers in cross-border property deals

3 Higher Equity Investment Limits for NRIs/PROIs

This year’s Budget expands investment access for NRIs and Overseas Indians:

Equity Market Participation Increased

· Individual NRI/PROI (Persons Resident Outside India) equity investment limit doubled from 5% → 10% in listed Indian companies.

· Overall cap on total NRI/PROI holdings per listed company increased from 10% → 24%.

Why this matters:

· NRIs can hold larger direct stakes in Indian companies

· Greater flexibility for long-term strategic investing rather than just short-term trades

· Often enhances liquidity and portfolio diversification opportunities

This is a strong signal that India wants to attract more long-term diaspora capital into capital markets.

4 Lower TCS on Overseas Remittances & Improved Cash Flow

Budget 2026 also introduced meaningful relief around TCS (Tax Collected at Source) on money sent abroad under the Liberalised Remittance Scheme (LRS):

Key changes:

· TCS on overseas tour packages, education, and medical remittances cut to 2% (from a previous range like 5–20% on some categories).

Impact for NRIs:

· When you send money from India for education, healthcare or travel abroad, your upfront tax withholding is now much lower

· Improves liquidity and reduces cash-flow friction for international expenses

This also makes planning family expenses and international travel more predictable from a tax perspective.

5 Easier Foreign Asset & Income Compliance

To tackle long-standing compliance friction, the Budget introduced schemes that benefit NRIs:

One-Time Foreign Asset Disclosure Window

A six-month window allows taxpayers — including NRIs — to disclose overseas income or assets without strict penalties.

Why this matters:

· Many NRIs struggle with reporting past foreign income/assets due to fear of penalties

· This scheme allows genuine disclosure and clean compliance ahead of future filings

Impact: Improves transparency and helps reduce the risk of tax disputes later.

Bonus: Other NRI-Relevant Tax Impacts in Budget 2026

🔹 No Major Change in Individual Tax Rates

While the tax law is restructured, base income-tax slabs remain largely unchanged for FY 2026-27 — meaning no new tax rates just for NRIs this year.

Automated Lower/Nil TDS Approval

Budget proposals include a rule-based system to approve lower or nil TDS certificates (e.g., for rentals, certain incomes) — reducing manual interaction with tax officers.

What This Means for Your NRI Playbook

Area	Before Budget 2026	After Budget 2026
Property	TAN required for TDS → delays	PAN-based TDS, fewer delays
Equity Investing	5% individual limit	10% limit + higher overall cap
Overseas Remittances	5–20% TCS	Flat 2% on travel/education/medical
Compliance	Complex foreign asset reporting	Amnesty window + simpler rules
Tax Law Framework	Fragmented old law	New organised tax code (Income Tax Act, 2025)

Practical NRI Checklist After Budget 2026-27

✅ Review your property holdings & compliance processes
✅ Rebalance equity investments to leverage higher limits
✅ Plan remittances for education or healthcare with reduced TCS
✅ Use the foreign asset disclosure window if you have past omissions
✅ Keep updated with new tax return forms & timelines under the new Act