Budget 2026: How Targeted Tax Reforms Are Making India More NRI-Friendly

While Budget 2026 may not have rolled out any flashy tax breaks for non-resident Indians (NRIs), it has certainly handed out something far more precious: predictability and ease of compliance. The government has done so through a series of targeted tax reforms that have removed some of the irritants that stood in the way of property transactions, overseas disclosures, and cross-border financial transactions.

A key focus of the budget is simplifying real estate transactions involving NRIs. Until now, resident buyers purchasing property from an NRI seller were required to obtain a separate Tax Deduction and Collection Account Number (TAN) to deduct tax at source, often for a single transaction. This additional step frequently delayed deals and deterred buyers unfamiliar with tax procedures.

Budget 2026 proposes to eliminate this requirement, allowing TDS to be deposited using a PAN-based challan instead. Effective October 1, 2026, this move aligns NRI property transactions with those involving resident sellers and significantly reduces friction at the execution stage.

Commenting on the broader impact, Aakash Ohri, Managing Director, DLF Home Developers Ltd, said, “From an NRI standpoint, the Union Budget is incrementally positive for Indian residential real estate, with its emphasis on easing transaction processes rather than introducing direct fiscal incentives. Procedural simplifications, alongside sustained infrastructure and urban development reinforce India’s positioning as a stable and maturing real-asset market, where long-term investment decisions continue to be guided by fundamentals such as location quality, developer credibility, yields and capital appreciation.”

Apart from the real estate sector, the budget also provides relief in foreign expenses. The Tax Collected at Source (TCS) on international tour packages has been lowered to 2 per cent, and the Liberalised Remittance Scheme payments for education and medical expenses will also be subject to a lower rate of 2 per cent TCS. Such changes ease the burden of immediate cash flow requirements and are more reflective of the true nature of such expenses. Frequent travelers and NRIs returning to India will also find it easier with simplified customs procedures, clearer guidelines on duty entitlements, and the introduction of online and mobile app-based customs filing systems, which will eliminate confusion at the point of entry.

Another significant announcement is the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, which gives taxpayers a one-time chance of six months to come clean and disclose any unreported foreign income or assets. This move recognizes that many defaults in disclosure, especially by students, young professionals, and NRIs who have moved to foreign countries, are often not intentional but accidental. The move allows taxpayers to cure past defaults with only limited relief in penalties and prosecution, and excludes serious cases involving crime and active investigations.

Vishwas Panjiar, Founder, SVAS Business Advisors, says, “A one-time 6-month window is being introduced for small taxpayers (students, young professionals, relocated NRIs, etc.) to disclose foreign income/assets within specified limits and get immunity. Earlier, foreign asset reporting lapses were treated very harshly and even genuine, small-value non-disclosures created disproportionate anxiety because overseas reporting provisions carry a strong enforcement flavour. What has changed is that the government has created a limited-time regularisation window with clear thresholds, defined payments and immunity from penalty/prosecution depending on category, so that genuine taxpayers can clean up without fear. The sensible approach is to use the window proactively, disclose fully because foreign information reporting is increasingly data-backed and waiting for a notice is the worst strategy.”

The Union Budget 2026 heralds the beginning of a new regulatory paradigm, moving from enforcement regulation to regulation by simplification. For NRIs, the clear message is that India is committed to encouraging foreign investment by making it easier, less complex, and less daunting, thus solidifying its position as a destination for long-term investment, especially in the residential segment.