Summary of this article
NRIs seek rationalisation of capital gains tax, clearer residential status rules, and consistent application of DTAA provisions.
Faster tax refunds, smoother foreign tax credit mechanisms, and reduced litigation over interpretation issues are also in their wishlist.
Liberalised norms for real estate, AIFs, start-ups, and debt instruments, along with simplified FEMA rules are needed.
NRIs also want stable policies, easier fund repatriation, and targeted incentives to boost diaspora investment in key sectors.
The Union Budget 2026 is set to be presented tomorrow (February 1), and like many other segments of society, Non-Resident Indians (NRIs) will be closely tracking it for measures that simplify taxation, reduce compliance burdens, and enhance clarity on investing in India.
A key expectation is rationalisation of the tax framework applicable to NRI income, particularly capital gains on equity, mutual funds, and immovable property, along with clearer rules on residential status and the taxability of overseas income. NRIs also hope for smoother processes for claiming tax refunds, easier access to credit for taxes paid abroad, and more consistent application of Double Taxation Avoidance Agreements.
“From an investment perspective, NRIs would welcome policy measures that encourage greater participation in India’s growth story, including through more liberal norms for real estate, start-ups, alternative investment funds, and debt instruments. Simplification of FEMA regulations, faster digital KYC, and more efficient banking services for NRE and NRO accounts would also go a long way in easing financial interactions with India,” says Aditya Bhattacharya, Partner, King Stubb & Kasiva, Advocates and Attorneys.
Budget 2026 is also expected to recognise the Indian diaspora as an important source of long-term capital. Targeted incentives for investments in sectors such as infrastructure, renewable energy, manufacturing, and start-ups could further strengthen NRI participation.
“Easing procedural hurdles around repatriation of funds and sale proceeds, along with ensuring policy stability and reducing interpretational disputes would help build investor confidence,” says Bhattacharya.
Vishwas Panjiar, Founder, SVAS Business Advisors, says that although no major changes are expected in the upcoming Budget, certain minor tweaks and reliefs should be announced to address some real pain points of the NRI community.
“A lot of litigation starts with manner of determination of residential status. The RNOR vs NRI classification decides what income is taxable in India, and we have seen genuine taxpayers get exposed simply because of day-count interpretation issues or documentation gaps,” he says.
NRIs also expect clearer comfort on treaty relief. If a Tax Residency Certificate is produced, the process should not become an open-ended debate with additional ‘substance’ type tests especially considering the recent Supreme Court ruling. Similarly, for NRIs with India-linked consulting or advisory income, one would expect clearer guidance on business connection and PE risk would reduce unnecessary anxiety.
On the compliance side, the expectation is practical: “allow foreign tax credit at the salary/RSU withholding stage, not only at return filing. Another area that we have recently witnessed is invoking additions on individuals in cases where the income is earned outside India and invested in India as somehow being “unexplained” in nature. It is expected that the government issues a relevant explanation in the provisions to prevent such misapplication of law,” says Panjiar.
Overall, NRIs expect the Budget to create a more transparent, stable, and investor-friendly environment that reinforces India’s appeal as a preferred destination for diaspora investments.
