Budget gives certain NRI professionals 5-year tax break on overseas income

Budget 2026-27 has introduced a significant tax incentive for non-resident Indian (NRI) professionals who come to India to work under government-notified schemes.

In the Union Budget 2026–27, the government has introduced a major tax benefit for non-resident Indian (NRI) professionals who come to India to work under certain government-notified schemes. This change is designed to attract global talent and make it easier for experts to contribute to Indian projects without facing heavy tax liabilities on their foreign income.

 

What is the new tax break?

 

Under the Budget proposal, NRI professionals who visit India and stay here under specific schemes will get a tax exemption on their overseas income for up to five years. During this period:

 

Only income earned from Indian sources will be taxed in India.

 

Income earned abroad (outside India) will be exempt from Indian tax, even if the individual resides in India for that duration.

 

Tax exemption on global income for foreign experts working in India removes a major irritant for senior global talent that may consider relocating to India. 

 

Who is eligible?

 

To qualify for this five-year exemption:

 

The individual must be a non-resident in the five financial years immediately before moving to India.

 

The exemption applies only if the stay in India is under government-notified schemes aimed at bringing professionals into India for specific assignments or projects. 

 

The government has introduced a special tax holiday to turn NRIs into partners for “Make in India.” NRIs providing capital goods to Indian companies will now enjoy a total income tax exemption for five years. This is  a clear incentive for manufacturing supply chains thinking of relocating to India.

 

Normally, if an NRI stays in India for a long period, India can tax their global income (income from all sources, both Indian and overseas). This can be a deterrent for professionals who earn abroad but wish to work temporarily in India — for example, in areas like technology, consulting or project-based roles. 

 Only income accruing or arising outside India (and not deemed to accrue or arise in India) qualifies. This ensures that India retains its taxing rights over India-sourced income while removing ambiguity over global income taxation during the engagement period.

   

With this new rule:

 

Professionals can work in India without worrying about tax on foreign earnings for up to five years.

 

It provides certainty and predictability for global income tax planning.

 

It makes India a more attractive destination for skilled professionals and experts to contribute to its growth agenda.

 

•  Key conditions to remember
•  Only non-resident professionals qualify
• They must have been non-resident for five years before coming to India
•  The benefit applies to foreign income only — not Indian-source income
•  The five-year window starts from the first year of service in India under a notified scheme

 

 What happens after five years?

 

Once the five-year exemption period ends, the individual will be taxed normally on:

 

Indian income

Foreign income, if their residential status changes under Indian tax law

This is important for long-term tax planning, especially for NRIs considering extended stays or relocation.