Union Budget 2026–27 did not rewrite every tax rule for Indians living abroad. What it did do is remove a few long-standing frictions and open a slightly wider door into Indian assets. For mid-level professionals managing money across two countries, that distinction matters. The useful changes are operational: how much you can own in one listed company, how a buyer pays TDS on your flat, how much cash is blocked when a family remits money abroad, and how small past reporting errors can be cleaned up.
The new Income-tax Act, 2025 took effect on 1 April 2026. For most NRIs, the core position is unchanged. If you are a non-resident, India still taxes Indian-source income — rent, capital gains on Indian assets, interest on NRO balances, salary for work done in India. Foreign salary, foreign rent and foreign investment income generally stay outside the Indian net while you remain non-resident. What changed is the statute’s structure, some compliance processes, and a handful of targeted reliefs.
1. Direct equity: a larger individual stake, not a free pass
Under the Portfolio Investment Scheme, an individual person resident outside India can now hold less than 10% of a listed Indian company’s paid-up equity, up from 5%. All such individual overseas holders together can hold up to 24%, up from 10%. The route, once limited to NRIs and OCIs, has been extended to other individual non-residents as well.
This helps if you want a concentrated position in a mid-cap manufacturer or a listed tech name instead of only mutual funds. It does not turn a personal portfolio into an institutional book. Cross 10% and the holding is treated as foreign direct investment, with a short window to sell down or accept FDI rules. US persons should still treat ordinary Indian mutual funds as PFICs; direct stocks or India ETFs listed in the US remain the cleaner route for them.
2. Selling Indian property: the TAN bottleneck ends on 1 October 2026
Buying from an NRI used to force the resident buyer to obtain a TAN just to deposit Tax Deducted at Source (TDS). From 1 October 2026, a resident individual or HUF can deposit that TDS using a PAN-based challan.
The tax itself has not been dropped. There is still no ₹50 lakh threshold when the seller is a non-resident, and rates remain those applicable to the NRI’s capital gains. The practical gain is speed: fewer buyers walk away because they do not want a one-time TAN. Until 30 September 2026, the old TAN process still applies.
3. The 5-year foreign-income relief is narrow
Budget 2026 created a five-year exemption on foreign-source income for certain non-resident individuals who come to India to render services under a notified government scheme. The person must have been non-resident for the five tax years immediately before that first visit. Indian-source income stays taxable.
This is a talent incentive, not a general “return home and rebuild your balance sheet tax-free” rule. An ordinary professional who comes back to live and work in India still moves through the usual residency path, including Resident but Not Ordinarily Resident (RNRO) status where it applies. Selling a house in New Jersey or a brokerage account in London after you become a full resident is not automatically sheltered by this provision. Check the notified scheme, your day-count, and a cross-border adviser before treating the five-year line as a planning assumption.
4. Remittances: lower TCS only for some uses
From 1 April 2026, TCS on Liberalised Remittance Scheme transfers for education and medical treatment above ₹10 lakh is 2%, down from 5%. Overseas tour packages now attract a flat 2%. Education funded by a specified loan remains nil.
That is cash-flow relief, not a tax cut. TCS is usually adjusted when the resident files a return. For other LRS uses — gifts, overseas investments, many personal transfers — the rate above ₹10 lakh is still 20%. Families funding a child’s degree get a real benefit. People moving surplus to a foreign brokerage do not.
5. FAST-DS 2026: a one-time cleanup, not a standing amnesty
The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, is open until 31 December 2026. It is aimed at students, young professionals and returning Indians with modest overseas reporting gaps, not large undeclared wealth.
Two categories matter:
- Undisclosed foreign income or assets up to ₹1 crore (valued as on 31 March 2026): pay 30% tax plus an equal additional amount, effectively about 60%, with immunity from prosecution if the scheme conditions are met.
- Certain foreign assets that were acquired from already-taxed income, or while the person was a non-resident, but later omitted from the foreign-asset schedule, up to ₹5 crore: a flat fee of ₹1 lakh.
Current non-residents can use the scheme if they were resident in India in the year the income arose or the asset was acquired. This is not a rule that “assets below ₹20 lakh are no longer criminal.” Black Money Act exposure still exists outside the scheme. Separately, the deadline to revise a return has been stretched to 31 March of the relevant year, with a fee after 31 December — useful, but it is not a substitute for FAST-DS.
What this means for allocation

How the picture changes by country of residence
The Budget changes sit on top of local tax systems. Those systems still drive most of the outcome.
United States. Citizens and green-card holders are taxed on worldwide income. FATCA reporting and PFIC rules make plain-vanilla Indian mutual funds unattractive. Direct Indian equities within the new 10% cap, or dollar India ETFs listed in the US, are usually cleaner. 401(k) and Roth capacity should stay the core of US compounding.
United Kingdom. The old ‘non-dom’ (non-domiciled) remittance basis ended on 6 April 2025. New arrivals may use a four-year foreign income and gains regime if they qualify; after that, UK residents are taxed on worldwide income and gains. ISAs still allow £20,000 a year in 2026/27. GIFT City or IFSC structures can be useful for Indian-facing investing, but they do not, by themselves, switch off UK tax for a UK resident.
Japan. Combined national and local rates can reach about 55%. NISA remains the main tax-efficient local wrapper. A weak yen reduces what a salary converts into in India, so many households build yen assets first and remit when the rate is less punitive.
Hong Kong. Salaries tax is territorial and capped at 15%, with no capital gains tax on typical portfolio sales. Surplus cash often moves into NRE deposits or Indian commercial property and private investments. The constraint is local living cost, not Indian tax.
UAE. Personal income is generally not taxed, so savings rates are high. That surplus can go into Indian listed equity and property without a local income-tax drag. The five-year Indian exemption still applies only if a later move to India fits the notified-scheme conditions.
A practical way to use the Budget
Treat 2026 as a compliance-and-access year, not a regime change. Raise a listed-stock position only if you can live with FEMA reporting and the 10% line. If you intend to sell Indian property after October 1st, provide the buyer with the PAN route to ensure the deal progresses smoothly. If a resident parent is paying foreign tuition, utilize the 2% TCS band and retain all relevant documentation. Additionally, if an old overseas account was overlooked during your residency, consider using FAST-DS before the 31st of December deadline expires.
Rules still differ by residential status, treaty position and the country that taxes you first. Confirm the notified-scheme list, FEMA circulars and your home-country filing duties with a cross-border adviser before moving money or changing residency.


















