The Union Budget 2026–27 has brought significant relief for Non-Resident Indians (NRIs) and other overseas individuals by simplifying compliance requirements related to property transactions and expanding investment access to Indian equity markets. Presenting her ninth consecutive Union Budget, Finance Minister Nirmala Sitharaman made history as the first finance minister of India to achieve this milestone and also the first to present a Union Budget on a Sunday.
Major Relief in NRI Property Transactions: TAN Requirement Dropped
One of the most impactful announcements in Budget 2026 is the removal of the Tax Deduction and Collection Account Number (TAN) requirement for resident individuals and Hindu Undivided Families (HUFs) purchasing immovable property from non-residents.
Currently, buyers are required to obtain a TAN even for a single property transaction involving a non-resident seller, a rule that does not apply when both parties are residents. This has long been considered an unnecessary compliance burden, especially since TANs are typically issued to corporate entities, while individuals use Permanent Account Numbers (PAN).
Under the new proposal, TDS on property purchases from non-residents will be deducted and deposited using the buyer’s PAN, similar to transactions between resident parties. This change will come into effect from October 1, 2026.
Explaining the move, the finance minister stated that the government intends to simplify tax compliance by allowing PAN-based reporting instead of mandatory TAN registration. To enable this, amendments will be made to Section 397(1)(c) of the Income Tax Act, exempting resident individuals and HUFs from obtaining a TAN for TDS deduction under Section 393.
This measure is expected to significantly reduce paperwork and streamline property transactions involving NRIs.
New Route for NRIs and Overseas Individuals to Invest in Indian Equities
The Union Budget 2026 also introduces a major reform aimed at widening access to Indian equity markets for NRIs and other overseas individuals. A new investment route has been proposed under the Reserve Bank of India’s Portfolio Investment Scheme (PIS).
Under the revised framework:
- The individual investment cap for Persons Resident Outside India (PROIs), including NRIs and foreign nationals, has been increased from 5% to 10% of a company’s paid-up capital.
- The aggregate investment limit for all such investors has been raised from 10% to 24%.
These enhanced limits will apply to listed shares and convertible debentures purchased on recognized stock exchanges.
Until now, overseas individuals primarily accessed Indian equities through Foreign Portfolio Investor (FPI) or Foreign Direct Investment (FDI) routes, both of which involved extensive registration and compliance. The expanded PIS framework now allows direct equity investments on both repatriation and non-repatriation bases through designated banks, in line with FEMA regulations.
According to officials, these reforms follow extensive discussions between the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) since early 2025. The objective is to broaden the investor base, encourage foreign inflows, and counter persistent FPI outflows.
What This Means for NRIs and India’s Economy
The measures announced in Budget 2026 are expected to:
- Reduce compliance hurdles in NRI property transactions
- Encourage direct participation of overseas individuals in Indian capital markets
- Diversify foreign capital sources
- Deepen market liquidity and participation
- Improve ease of doing business
Overall, the Union Budget 2026 marks a decisive step toward making India a more NRI-friendly investment destination, aligning regulatory frameworks with global best practices and supporting long-term economic growth.
Budget 2026
