Many Reforms for NRI's - Budget 2026-27

The Union Budget presented on February 1, 2026 (FY 2026–27) introduced several measures aimed at easing investment, simplifying compliance, and reducing transaction frictions for Non-Resident Indians (NRIs). The reforms span capital markets, taxation, remittances, and disclosures, making India a more attractive destination for overseas Indian capital.

1. Easier Equity Investments via PIS: NRIs and other Persons Resident Outside India (PROIs), including PIOs, can now invest more freely in Indian listed equities through the Portfolio Investment Scheme (PIS):

·        Individual investment limit per company increased from 5% to 10%

·        Aggregate overseas individual limit raised from 10% to 24%

This significantly enhances NRIs’ ability to build meaningful equity stakes in Indian companies and deepens foreign participation in domestic markets. Equity products like PMS & AIF will find a huge boost.

2. Simplified TDS for NRI Property Sales:  To reduce procedural complexity in real estate transactions. TDS on the sale of immovable property by NRIs will now be deducted by the resident buyer using PAN only. TAN registration is no longer required. This streamlines compliance, cuts paperwork, and accelerates transaction timelines. This reform primarily benefits resident buyers (easing their side), but has strong positive ripple effects for NRIs selling property

3. Sharp Reduction in TCS under LRS: Tax Collected at Source (TCS) rates under the Liberalised Remittance Scheme (LRS) have been substantially lowered:

·        Education and medical treatment abroad: from 5% to 2%

·        Overseas tour packages: from 20% to 2%

These changes reduce cash-flow strain for NRIs and their families funding overseas education, healthcare, or travel. This reform primarily benefits resident Indians funding overseas needs but has significant positive implications for NRIs (especially those with family in India or planning visits/returns). Huge relief for middle-class families sending kids to foreign universities or funding treatments (e.g., in US, UK, or Gulf countries). Reduces financial strain, especially with rising education/medical costs.

Benefits for NRIs indirectly:

• Easier for resident relatives to send money abroad to NRIs (e.g., for family support, property maintenance, or investments).
• NRIs planning to remit back to India or fund family needs face less friction when routing through LRS.
• Encourages more cross-border family financial support without a heavy tax drag.

4. Additional Relief Measures

Extended timelines to update income tax returns, including in certain post-reassessment cases, upon payment of additional tax

One-time disclosure schemes for foreign assets, targeted at small taxpayers, students, and returning NRIs, to encourage voluntary compliance

Conclusion:

While tax rates remain largely unchanged, the 2026–27 Budget focuses on reducing friction, improving ease of doing transactions, and attracting long-term NRI participation in India’s economy. The cumulative impact is a more investor-friendly and compliance-light framework for overseas Indians. Aligns with the government's goal to make India more open, support global mobility, and reduce "unfriendly" tax perceptions on overseas spending. Timely amid rising global education/medical/travel costs. It makes overseas aspirations more achievable for Indians and supports NRIs' family connections.