Budget 2026-27 and the NRI: What Actually Changed, What Was Hype, and the Four Moves Worth Making Now

For weeks before 1 February, the NRI advisory WhatsApp groups ran the same wishlist: cut the 20% short-term capital gains rate, give non-residents back the indexation option on property, raise the Section 87A rebate so returning NRIs pay nothing up to Rs 12 lakh. Finance Minister Nirmala Sitharaman delivered none of it. The slabs did not move, the capital gains rates did not move, and the rebate is still bolted to residency. What Budget 2026-27 actually did for NRIs was quieter and, in two cases, genuinely useful: it doubled how much of a listed company you can own, it killed the TAN requirement that was scaring resident buyers away from your property, it cut LRS remittance TCS, and it opened a six-month amnesty for the foreign assets you forgot to disclose. The trick this year is telling the plumbing from the price.

The 30-second answer: Budget 2026-27 left NRI tax rates untouched: new-regime slabs unchanged, capital gains still 20% short-term and 12.5% long-term on equity under Section 115AD, 12.5% without indexation on property, and the 87A rebate still residents-only. What did change is operational. From 1 October 2026 a resident buying property from an NRI deducts TDS on their own PAN, no TAN required, widening your buyer pool. The individual NRI equity cap doubles from 5% to 10% of a company, aggregate from 10% to 24%. LRS TCS on education and medical remittances falls to 2% (from 5%) and overseas tour packages to a flat 2%. A new FAST-DS amnesty gives a six-month window to disclose foreign assets, Rs 1 lakh flat for clean NRI-era assets up to Rs 5 crore. Share buybacks are now fully capital gains for all shareholders.

This guide assumes you already know how NRI capital gains and TDS work in the steady state; if you do not, the capital gains guide and the TDS guide cover the baseline. What follows is strictly the delta: what the Budget changed against that baseline, ranked by whether it touches your money or just your paperwork, with the four moves worth making before the new rules bite.

The non-event that matters most: rates did not move

Start with what did not happen, because the absence is the story. Every pre-Budget piece floated a capital gains cut. None came. An NRI selling listed equity still pays 20% on short-term gains (held twelve months or less) and 12.5% on long-term gains above Rs 1.25 lakh a year under Section 115AD. Property held over 24 months is still long-term at 12.5% with no indexation, and the option to pay 20%-with-indexation that residents got for pre-23-July-2024 purchases is still denied to non-residents. Debt funds bought on or after 1 April 2023 are still slab-rated with no long-term benefit. If you were waiting for the Budget to make selling Indian property cheaper, it did not, and you should plan as though the no-indexation penalty is permanent, because three Budgets have now declined to reverse it.

The slab story is the same shape. The new-regime structure stayed put: nil up to Rs 4 lakh, 5% to Rs 8 lakh, 10% to Rs 12 lakh, climbing to 30% above Rs 24 lakh, with the Section 87A rebate continuing to zero out a resident's liability up to Rs 12 lakh of income (Rs 12.75 lakh for salaried, after the Rs 75,000 standard deduction). Read the small print that the resident-focused coverage skips: that rebate is for resident individuals only. An NRI with Rs 10 lakh of Indian rental and interest income does not get it, and Budget 2026 did not extend it. The one structural change in the tax law is the new Income Tax Act, 2025 coming into force from 1 April 2026, replacing the 1961 Act with renumbered sections and redesigned forms. That is a re-codification, not a rate change, but it will rename the sections you have memorised, and the Income Tax Act 2025 NRI impact guide walks through which references move where.

So the honest framing of the headline: on the thing that costs you the most, your effective tax on gains and income, Budget 2026 changed nothing. Treat the rest of this article as a set of friction reducers, not a tax cut.

Selling property got easier to close, not cheaper to do

This is the change most likely to put money in a real NRI's pocket, and it is widely misunderstood. When a resident buys property from an NRI, they must deduct TDS under Section 195. Until now, doing that legally required the buyer to obtain a TAN, a separate tax-deduction account number, file quarterly TDS returns, and issue Form 16A. For a resident buying their first flat, that paperwork was terrifying, and the practical result was that resident buyers actively avoided NRI sellers, or demanded a discount to compensate for the hassle. NRI sellers were quietly penalised in the price.

From 1 October 2026, the buyer deducts the TDS using their own PAN on an ordinary challan, the same mechanism residents already use when buying from other residents under Section 194-IA, with no TAN and no quarterly returns. The friction that shrank your buyer pool is gone.

Be precise about what this does and does not do, because the property advisory coverage is overselling it. It does not lower the tax. The buyer still withholds at 12.5% (long-term) or 20% (short-term) plus surcharge and cess, and critically, still tends to deduct on the entire sale consideration rather than on your actual gain, because they have no way to compute your gain. The trap that locks up lakhs of your money for a year is the over-withholding, and the Budget left it fully intact.

Put real numbers on the gap. Suppose you, an NRI, sell an inherited flat in Pune for Rs 1,80,00,000 with a true long-term gain of Rs 60,00,000. Your actual tax liability, at 12.5% plus 15% surcharge and 4% cess, is roughly Rs 8,97,000. But the buyer, deducting on the full sale value at 12.5% plus surcharge and cess, withholds about Rs 26,91,000. That is roughly Rs 18,00,000 of your money parked with the government until you file a return and wait months for the refund. The new PAN-based rule means your buyer is no longer scared off by the TAN paperwork, but they will still over-withhold that Rs 18 lakh. The only thing that prevents it is a lower-deduction certificate under Section 197 (Form 13), filed before the sale, which tells the buyer the exact, smaller amount to deduct. Budget 2026 was lobbied hard to make the Section 197 process faster and online for NRIs, and it did not. So the move is unchanged: on any property sale of size, get the Section 197 certificate, and now also tell your buyer they no longer need a TAN, which removes their excuse to discount you. The full mechanics are in TDS for NRIs and refunds.

The equity cap doubled, and for most of you it is irrelevant

The most-shared NRI headline of the Budget was that the individual investment cap doubled from 5% to 10% of a listed company's paid-up capital, with the aggregate ceiling across all overseas individual investors rising from 10% to 24%, and extendable toward the sectoral FDI limit with a board resolution and a special resolution. Genuine reform, and a real signal that India wants diaspora capital deeper in its markets. But be honest about who it touches.

If you are the typical reader of this site, a salaried professional in London or Dubai putting two or three lakh a quarter into Indian equity through your NRE-PIS account, the 5% cap was never within a thousand miles of your holdings. You will not notice this change, and any advisory telling you to "rebalance to take advantage of the higher cap" is selling you something. The cap binds in exactly three situations: large single-family holdings concentrated in one stock, promoter-adjacent or founder NRI stakes, and small or mid-cap companies where aggregate NRI ownership had hit the old 10% ceiling and the registrar had frozen further NRI purchases. In that last case, if you tried to buy a stock and your broker said "NRI limit breached, order rejected," this Budget reopens the door, the aggregate room just went from 10% to 24%.

There is a quieter point worth more than the cap to most readers, and it sits alongside the Budget rather than inside it: the regime now formally lets Persons Resident Outside India, a wider category than NRI or OCI, route money through the Portfolio Investment Scheme, and continues the push, started in Budget 2025, to make GIFT City the tax-neutral hub for global Indian capital. Funds can relocate from Mauritius and Singapore into GIFT City as a tax-neutral transaction, the IFSC tax holiday runs to 2030, and the P-note exemption was extended to non-bank FPIs there from April 2026. None of that is a 2026-specific giveaway, but the direction is consistent: if you are building a sizeable India-facing portfolio, GIFT City is increasingly the cleaner structure than a Mauritius feeder, and worth a conversation. For asset-allocation context, see NRI portfolio and asset allocation. The honest read on the cap itself: real for large and concentrated holders, noise for the salaried SIP investor.

Remittance got cheaper to send, modestly

Here is a change that touches almost every reader at least once. Under the Liberalised Remittance Scheme, the TCS (tax collected at source) on outward remittances for education and medical purposes drops to 2%, from the earlier 5%, and TCS on overseas tour packages becomes a flat 2% with no threshold. TCS is not a tax you lose; it is collected at source and you claim it back as a credit against your Indian tax or as a refund. But it is your cash, parked with the government until you reconcile it, so a lower rate is a genuine liquidity improvement, particularly for families funding a child's overseas education out of Indian funds.

Make it concrete. Suppose you remit Rs 40,00,000 from your NRO account toward a child's university fees abroad in a year, above the Rs 10 lakh LRS threshold that triggers TCS. Under the old 5% rate on the amount above the threshold, the bank would collect 5% of Rs 30,00,000, or Rs 1,50,000, locked up until you reclaimed it. At the new 2% rate, that becomes Rs 60,000, freeing roughly Rs 90,000 of your cash at the point of transfer. You would have recovered it either way, but the float now stays in your pocket for the year rather than the Treasury's. One nuance NRIs miss: the LRS itself applies to residents remitting abroad, and as a non-resident your own outbound transfers run on different rails (your NRE balance is freely repatriable, NRO is capped at USD 1 million a year with Form 15CA/15CB), so the TCS cut matters most for the resident family members you are funding, or for the year you return to India and become resident again. The repatriation mechanics are unchanged by this Budget and covered in NRE, NRO and FCNR accounts.

The amnesty almost nobody is talking about correctly

The Budget item with the largest potential downside if you ignore it is the one buried in the fine print: the Foreign Assets of Small Taxpayers Disclosure Scheme, FAST-DS 2026, notified alongside the Finance Bill. It is a one-time, six-month voluntary window to regularise foreign assets you never disclosed on Schedule FA of your Indian return, with full immunity from penalty and prosecution under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015.

Why this matters specifically to NRIs, and to returning NRIs above all: the moment your Indian residential status flips to resident (which happens automatically if you spend enough days in India, and during the RNOR transition that follows a return), you become obliged to report your global assets on Schedule FA, the overseas bank account you opened as a student and never closed, the RSUs and ESOPs from your foreign employer, the 401(k) or ISA or brokerage account, the insurance policy denominated in pounds. Miss any of them and the Black Money Act can impose a penalty of Rs 10 lakh per asset per year plus tax, plus prosecution, regardless of whether the asset itself was bought with already-taxed money. It is the harshest enforcement regime in Indian tax law, and the most common way an honest returning NRI gets badly hurt.

FAST-DS offers two routes. Category A charges 60% of the undisclosed value where the aggregate is up to Rs 1 crore. That is punishing, and is aimed at genuinely undisclosed income. Category B is the one that matters for clean NRIs: a flat Rs 1 lakh fee, irrespective of value, where the asset was acquired from already-taxed income or during your NRI years and is worth up to Rs 5 crore, with the same full immunity. For a returning NRI sitting on a USD 200,000 brokerage account funded entirely from salary already taxed abroad, that account is not undisclosed income, it is just unreported on an Indian form, and Rs 1 lakh to extinguish a multi-lakh-per-year penalty exposure is cheap insurance.

The honest caveat: this is not a blanket "everyone should disclose" call, and it is not a blog decision. If your aggregate genuinely undisclosed foreign income is large, 60% under Category A is steep, but the alternative under the Black Money Act is worse, and India's CRS data-sharing means the department increasingly already knows. If your assets are clean NRI-era holdings, Category B at Rs 1 lakh is close to a no-brainer. Either way, run it past a CA before the six-month window (start date to be notified) closes, because the immunity disappears with it. The day-counting that determines when this obligation switches on for you is in NRI residency and RNOR rules.

The smaller print: buybacks, STT, and what the Budget signalled

A few changes are real but narrow. Share buybacks are now treated as capital gains for all shareholders, completing the shift that began in October 2024 when buyback proceeds first moved to being taxed in the shareholder's hands. For an NRI holding shares of a company announcing a buyback, you now compute a capital gain (sale price less cost), rather than the deemed-dividend treatment, which for many NRIs is the better outcome because the treaty and the 12.5% long-term rate can apply. STT rose on derivatives (futures to 0.05%, options premium to 0.15%), which matters only if you trade F&O, which most NRIs cannot do on a PIS account anyway. Customs duty on personal imports fell to 10%, relevant for the year you ship household goods back to India.

The larger signal, read across Budget 2025 and 2026 together, is a deliberate pivot: India is done treating NRIs purely as a remittance tap and is building the rails for diaspora capital and participation, deeper equity ownership, GIFT City as the structuring hub, smoother property exits, lighter remittance friction, paired with much harder transparency, CRS data-sharing, Schedule FA enforcement, and the amnesty to clean up the backlog. The deal on offer is: invest more freely, but report everything. For the recent context that frames this, see the capital gains overhaul recap and the RBI FCNR swap window.

Edge cases

You are selling property between now and 1 October 2026. The PAN-based TDS relief is not retroactive. A sale that closes before 1 October still requires the buyer to obtain a TAN, so factor the old friction into deals closing this summer, and lean harder on the Section 197 certificate to keep the buyer comfortable.

You returned to India in FY 2025-26 and are now RNOR. You are squarely in the FAST-DS target group. RNOR shields your foreign income from Indian tax for the transition years, but it does not exempt you from disclosing foreign assets on Schedule FA once you are resident. The amnesty is the moment to reconcile holdings you carried home before the next filing exposes them.

You are a UAE resident reading about the higher equity cap. The cap change helps you own more, but your real edge is unchanged and untouched by this Budget: the India-UAE treaty can still take your Indian tax on listed-share gains to zero with a TRC and Form 10F. The cap lets you build a bigger position; the treaty is what makes that position tax-efficient. Pair them.

You file under the new Income Tax Act, 2025 from AY 2027-28. Section numbers you rely on will change. The capital gains regime is substantively the same, but "Section 115AD" and "Section 195" may carry new numbers in the redesigned forms. Do not assume a section reference in old advice still points to the same rule next year.

The honest read

The honest read on Budget 2026-27 is that it was a friction Budget, not a rate Budget, and the smart NRI response is to act on the plumbing while ignoring the hype. The two changes that move real money are unglamorous: the PAN-based property TDS rule, which widens your buyer pool and lets you push back on any TAN-related discount, and the FAST-DS amnesty, which is cheap protection against the single most dangerous enforcement regime an NRI faces. The equity cap is a genuine reform that most salaried readers will never touch. The TCS cut is a modest liquidity win on remittances, mostly for the family you fund in India. And the wishlist, a capital gains cut, the property indexation option, the 87A rebate for NRIs, was again denied, so stop waiting for it.

So, four moves. First, if you are selling Indian property, time it after 1 October 2026 where you can, tell the buyer no TAN is needed, and still file a Section 197 lower-deduction certificate, because the over-withholding trap survived untouched. Second, if you have ever held a foreign account, RSU, or policy you did not put on Schedule FA, get a CA to price the FAST-DS Category B route, Rs 1 lakh to extinguish a Rs 10-lakh-per-asset-per-year exposure is the best-value line in the whole Budget for a returning NRI. Third, ignore the equity-cap noise unless you are a genuinely large or concentrated holder, in which case revisit whether GIFT City is now the cleaner structure. Fourth, factor the 2% TCS into the timing of any education or medical remittance you fund from India. If your situation is a large property sale, a sizeable undisclosed-asset history, or a GIFT City structuring decision, that is the point to pay a professional, not to rely on a Budget summary, this one included.

Related guides

• Income Tax Act 2025: what changes for NRIs
• Capital gains overhaul of July 2024: the recap
• The RBI FCNR swap window of 2026
• ITR filing for NRIs: AY 2026-27
• Capital gains tax for NRIs on shares and mutual funds
• NRI residency and RNOR rules
• TDS for NRIs and how to claim refunds
• NRE, NRO and FCNR accounts
• NRI portfolio and asset allocation
• All News and analysis
• All Taxation guides
• All Banking guides
• All Investments guides

This guide is news analysis, educational and general in nature, written shortly after the Budget on 1 February 2026 and before all rules are notified in final form. It is not individual tax advice. Several provisions here, including the PAN-based property TDS rule, the FAST-DS scheme, and the equity-cap changes, take effect on specific notified dates and may be refined in the Finance Act and subsequent CBDT notifications, so confirm the final form and your specific position with a qualified chartered accountant before you act.