Budget 2026 brings tax relief, investment flexibility for overseas Indians

From lower TCS on foreign travel to easier equity access and property sale relief, Budget 2026 brings a clutch of changes for NRIs and overseas Indians

Finance Minister Nirmala Sitharaman on Sunday unveiled a set of reforms in the Union Budget 2026–27 focused on overseas financial transactions, with changes affecting non-resident Indians (NRI), international travellers, and families paying for education or medical treatment abroad.

 

The announcements cover equity investment rules, tax collection on foreign spending, property transactions, and compliance relief for overseas assets.

 

According to the Ministry of External Affairs, there are about 35.4 million overseas Indians worldwide. Of these, 15.8 million are Indian citizens and 19.6 million are persons of Indian origin.

 

Here is what the Budget announced for NRIs and overseas Indians.

 

 

Easier equity investment for overs  Indians abroad will find it easier to invest in domestic stock markets, according to proposals announced in the Union Budget, which also gives tax relief to families paying for education or medical treatment in foreign countries.

 

Finance Minister Nirmala Sitharaman announced measures covering equity investment rules, tax collection on foreign spending, property transactions, and compliance relief for overseas assets. According to the Ministry of External Affairs, there are 35.4 million overseas Indians. Of these, 15.8 million are Indian citizens and 19.6 million are persons of Indian origin.

 

Here is what the Budget announced for NRIs and overseas Indians. 

 

Easier equity investment for overseas individuals

 

The Budget proposed to allow “individual persons resident outside India (PROI)” to invest more freely in domestic equity markets.

 

“It is also proposed to increase the investment limit for an individual PROI under the scheme from 5 per cent to 10 per cent, with an overall investment limit for all individual PROIs to 24 per cent from the current 10 per cent,” said Sitharaman, expanding access allowed under the Portfolio Investment Scheme.

 

Under the Foreign Exchange Management Act, anyone living abroad is treated as a person resident outside India. A non-resident Indian (NRI) holds an Indian passport, while a person of Indian origin has a foreign passport with Indian roots. Subject to regulations, both categories are allowed to invest in Indian securities, open bank accounts, and own property.

 

Lower tax on overseas tour packages

 

Tax collected at source (TCS) on overseas tour packages will be reduced to a flat 2 per cent from the previous 5 per cent, said the Budget.

 

Earlier, overseas tour spending was subject to a tiered TCS structure, with higher rates kicking in once spending crossed specified thresholds. The revised rule applies the 2 per cent rate “without any stipulation of amount”, reducing the upfront tax collected from travellers.

 

 

Relief for education and medical remittances

 

Families remitting money abroad for education and medical treatment will get tax relief, too. TCS under the Liberalised Remittance Scheme for such expenses has been lowered to 2 per cent from 5 per cent.

 

The move reduces the cash blocked at the time of remittance for households paying overseas tuition fees or medical bills.

 

Simpler property transactions for NRIs

 

The Budget addressed a long-standing procedural issue in NRI property sales. For sales of immovable property by NRIs, tax deduction and deposit will now be carried out using the buyer’s PAN-based challan.

 

Resident buyers will no longer need to obtain a Tax Deduction and Collection Account Number, a process that often delayed transactions.

 

One-time foreign asset disclosure window

 

A six-month, one-time Foreign Asset Disclosure Scheme was also announced. It applies to students, young professionals, technology workers and relocated NRIs with undisclosed overseas income or assets.

 

Under the scheme:

 

Undisclosed foreign income or assets up to Rs 1 crore can be regularised by paying 30 per cent tax plus an additional 30 per cent, with immunity from prosecution. 

For assets acquired but not declared up to Rs 5 crore, immunity from penalty and prosecution will be available on payment of a Rs 1 lakh fee.

 

The window is intended to allow individuals to resolve past disclosure gaps without facing criminal proceedings.

 

Continuation of earlier remittance reforms

 

The measures build on earlier Budget changes to foreign remittances. In recent years, the exemption threshold for TCS under the Liberalised Remittance Scheme was raised to Rs 10 lakh per financial year, allowing smaller overseas transfers without upfront tax collection.

 

“From an investment standpoint, the Budget 2026 provisions enhancing immunity for NRIs are a welcome step towards reducing regulatory and tax friction. Measures such as simplifying TDS compliance on property transactions, extending the window for filing revised ITRs, and providing clearer frameworks for portfolio and equity investments create predictability and certainty, which are critical for cross-border investors,” said Rajarshi Dasgupta, executive director, tax, AQUILAW, a law firm.

 

 “By lowering procedural hurdles and offering structured safeguards, these steps not only protect NRIs from inadvertent penalties but also encourage more long-term, stable participation in Indian markets,” he said.

 

“Such investor-friendly measures signal that India is serious about integrating its diaspora into the formal investment ecosystem, balancing oversight with practical flexibility.”

 

Investment limits left unchanged

 

The Budget did not alter existing limits on certain categories of overseas investment, leaving current caps in place.

 

What is the new option to update ITRs?

 

Taxpayers will be allowed to update income tax returns even after reassessment by paying an additional 10 per cent tax. The time limit for revising returns has also been extended with a nominal fee.

 

Individuals filing ITR-1 and ITR-2 can continue to file returns until July 31. Non-audit cases and trusts will have time until August 31.