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On February 1, 2026, Sunday, Finance Minister, Nirmala Sitharaman announced several useful tax reforms for non-resident Indians. Here are some of the key tax reforms for NRIs announced in Budget 2026:
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Passenger Facilitation
Duty-free allowances have been revised and clarity provided to bring a new laptop along with personal effects.
Convenient declaration for foreign passengers
Online and App based facility for making declaration and duty payment.
Facility while transferring residence from abroad
Duty free entitlement revised to bring household articles from abroad.
Custom Rationalization
A uniform customs duty for all personal imports, including gifts.
Simplifying Property-Related Compliance
TAN for property transactions involving NRIs will be replaced with resident buyer’s PAN based challan
TCS Rationalization
- Reduce TCS rate on sale of overseas tour program package to 2% (from current 5% & 20%).
- Reduce the TCS rate to 2% (from current 5%) for LRS remittance for education and medical.
Foreign Asset of Small Taxpayers Disclosure Scheme
A one-time 6-month foreign asset disclosure scheme for small taxpayers to disclose their overseas income or asset.
The government said that the expected impact of this can be greater compliance ease for NRIs. Reduced friction in cross-border transactions. Stronger engagement of the diaspora with the Indian economy.
Budget 2026: Simplifying Property-Related Compliance
TAN for property transactions involving NRIs will be replaced with resident buyer’s PAN based challan
Relaxation from requirement to obtain tax deduction and collection account number (TAN) by a resident individual or HUF, where the seller of the immovable property is a non -resident Section 397(1)(a) of the Act provides that every person, deducting or collecting tax shall apply to the Assessing Officer for the allotment of a “tax deduction and collection account number” (TAN). Clause (c) of the said sub-section provides for cases where a person is not required to obtain TAN.
Presently, if a person buys an immovable property from a resident seller, the person is not required to obtain (TAN) to deduct tax at source.
However, where the seller of the immovable property is a non-resident, the buyer is required to obtain TAN to deduct tax at source. This creates an unnecessary compliance burden for the buyer, as he would need TAN for a single transaction.
In order to reduce compliance burden for the resident individual and Hindu undivided family, Budget 2026 proposed to amend section 397(1)(c) of the Act to provide that resident individual or Hindu undivided family, is not required to obtain TAN to deduct tax at source in respect of any consideration on transfer of any immovable property under section 393(2).
The amendment will take effect from the 1st day of October, 2026.
Budget 2026: The Foreign Assets Of Small Taxpayers Disclosure Scheme, 2026
CA Suresh Surana says that the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (‘the Act’) was introduced to tackle the issue of unreported foreign income / offshore assets held by Indian residents. Earlier, the government had offered a one-time disclosure window between 1 July 2015 and 30 September 2015, allowing taxpayers to voluntarily report foreign assets acquired up to 31 March 2015 by paying the required tax and penalty.
Despite these measures, instances of non-compliance have continued, especially among small taxpayers (such like students, young professionals, tech employees, relocated NRIs, and such others), whose omissions are often inadvertent. Such cases typically result from limited awareness and not due to deliberate concealment. Some of the examples include foreign assets earned through employment-related benefits like Employee Stock Option Plans (ESOPs) or Restricted Stock Units (RSUs), low-value or dormant bank accounts opened during studies abroad, insurance or saving products purchased while residing overseas, and assets retained unintentionally by individuals on temporary foreign assignments.
Further, information shared under the Automatic Exchange of Information (AEOI) framework has highlighted significant gaps in reporting by PAN holders, particularly with respect to foreign financial assets. It was felt that there was a need to have a practical and enabling mechanism to help taxpayers rectify past such reporting mistakes and ensure compliance.
To address these legacy issues and promote voluntary compliance, the government has proposed a time-bound disclosure scheme for foreign assets and foreign-sourced income. Under this initiative, taxpayers would be permitted to declare such holdings upon payment of applicable taxes or fees, determined by the nature and source of acquisition. In return, the scheme would provide limited relief from penalty and prosecution under the Black Money Act for matters duly declared. However, cases linked to ongoing prosecution or involving proceeds of crime would be expressly excluded to maintain the integrity of enforcement efforts.
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