Like every year, this year budget is also presented on Feb 1 of the year, which is Feb 1, 2026 for current year budget. This is the first budget presented on Sunday. Budget is presented by the Honourable Finance Minister Smt Nirmala Sitharaman. In this budget, honourable FM has proposed some new tax and other provisions. Hereunder, we have summarised some major proposals which would have impact on NRIs, OCIs, Expatriates, Seafarers and other Non-residents.
Tax Slabs, Tax Rates – Applicable for FY 2026-27 (i.e. For The Year Ending March 31, 2027), AY 2027-28
Changes In Old Regime: There is no change made in tax slabs or tax rates under the old tax regime (i.e. regime where various deductions can be claimed however tax rates are otherwise more as compare to New Regime). Hence, the tax rates which are applicable for FY 2025-26 will be applicable for FY 2026-27. Here is a table for Tax Rates under Old Regime
Comparative Chart of Existing Vs Proposed Tax Rates under Old Regime
| Earlier Tax Slab & Rates (Applicable For FY 2025-26) | Budget 2026 Proposed Tax Slab & Rates (Applicable For FY 2026-27) | ||
| Tax Slabs | Tax Rates | Tax Slabs | Tax Rates |
| <= 2.50 Lakh | Nil | <= 2.50 Lakh | Nil |
| 2.50 Lakh to 5 Lakh | 5% | 2.50 Lakh to 5 Lakh | 5% |
| 5 Lakh to 10 Lakh | 20% | 5 Lakh to 10 Lakh | 20% |
| >10 Lakh | 30% | >10 Lakh | 30% |
Changes In New Regime: Since last many budgets, Govt is trying to shift taxpayer choice to New Tax Regime (i.e. regime where various deductions are not available however tax rates are lower as compared to old regime). Hence, significant changes (in terms of lowering tax liability under New Regime) have been made. In the present budget (i.e. Budget 2026), there is no change proposed.
Hereunder, is a table depicting the tax slab & Rates for last two years and proposed rate for the Financial Year 2026-27 (i.e. AY 2027-28)
Comparative Chart – Earlier Year Tax Rates Vs Proposed Tax Rates Under New Regime
| New Tax Regime | |||||
| Tax Slabs & Rates (FY 2024-25) | Tax Slabs & Rates (FY 2025-26) | Budget 2026 Proposed Tax Slabs & Rates (FY 2026-27) | |||
| Tax Slabs | Tax Rate | Tax Slabs | Tax Rate | Tax Slabs | Tax Rate |
| <= 3 Lakh | Nil | <= 4 Lakh | Nil | <= 4 Lakh | Nil |
| 3 Lakh to 7 Lakh | 5% | 4 Lakh to 8 Lakh | 5% | 4 Lakh to 8 Lakh | 5% |
| 7 Lakh to 10 Lakh | 10% | 8 Lakh to 12 Lakh | 10% | 8 Lakh to 12 Lakh | 10% |
| 10 Lakh to 12 Lakh | 15% | 12 Lakh to 16 Lakh | 15% | 12 Lakh to 16 Lakh | 15% |
| 12 Lakh to 15 Lakh | 20% | 16 Lakh to 20 Lakh | 20% | 16 Lakh to 20 Lakh | 20% |
| >15 Lakh | 30% | 20 Lakh to 24 Lakh | 25% | 20 Lakh to 24 Lakh | 25% |
| >24 Lakh | 30% | >24 Lakh | 30% | ||
Analysis of Budget Proposals For Tax Rates Changes – For NRIs
- Since, Govt want to shift tax payers from Old Regime to New Tax Regime, hence, there is no change made in the Budget 2026 under Old Regime.
- New Regime is a good option and beneficial for Non-residents as they do not claim deductions in their ITR.
- As per the proposed changes under New Tax Regime, Non Residents shall get advantage of tax saving.
New Tax Regime – Benefit Analysis of Budget 2026 Proposal – FY 2025-26 Vs 2026-27
| (A) | (B) | (C) | ||||||
| Income Rs | Tax (FY 2024-2025) | Tax (FY 2025-2026) | Tax (FY 2026-2027) | Tax Benefit FY 2026-27 Vs FY 2025-26 (A-B) | Tax Benefit FY 2026-27 Vs FY 2024-25 (A-C) | |||
| Tax @ Slab rate | Total Tax (incl SC & Cess) | Tax @ Slab rate | Total Tax (incl SC & Cess) | Total Tax (incl SC & Cess) | ||||
| 4 Lakhs | 5,000 | 5,200 | 0 | 0 | 5,200 | 0 | 5,200 | |
| 8 Lakhs | 30,000 | 31,200 | 20,000 | 20,800 | 10,400 | 20,800 | 10,400 | |
| 12 Lakhs | 80,000 | 83,200 | 60,000 | 62,400 | 20,800 | 62,400 | 20,800 | |
| 15 Lakhs | 1,40,000 | 1,45,600 | 1,05,000 | 1,09,200 | 36,400 | 1,09,200 | 36,400 | |
| 16 Lakhs | 1,70,000 | 1,76,800 | 1,20,000 | 1,24,800 | 52,000 | 1,24,800 | 52,000 | |
| 20 Lakhs | 2,90,000 | 3,01,600 | 2,00,000 | 2,08,000 | 93,600 | 2,08,000 | 93,600 | |
| 24 Lakhs | 4,10,000 | 4,26,400 | 3,00,000 | 3,12,000 | 1,14,400 | 3,12,000 | 1,14,400 | |
| 40 lakhs | 8,90,000 | 9,25,600 | 7,80,000 | 8,11,200 | 1,14,400 | 8,11,200 | 1,14,400 | |
| 50 Lakhs | 11,90,000 | 12,37,600 | 10,80,000 | 11,23,200 | 1,14,400 | 11,23,200 | 1,14,400 | |
| 60 Lakhs | 14,90,000 | 17,04,560 | 13,80,000 | 15,78,720 | 1,25,840 | 15,78,720 | 1,25,840 | |
| 120Lakhs | 32,90,000 | 39,34,840 | 31,80,000 | 38,03,280 | 1,31,560 | 38,03,280 | 1,31,560 | |
- Hence, from the above table it clearly seems that there is a significant amount of tax relief in proposed financial year (i.e. FY 2026-27) as compared to earlier years.
Immovable Property Sale In India By NRIs – Removal of TAN Requirement For Buyers
Existing Law: Buyer is under obligation to obtain a TAN (TDS Number) for TDS compliances if the seller of property is a Non-resident. It causes extra burden and time consumption for completing a sale transaction by Non-resident with buyer.
Proposed Amendment: Wef October 1, 2026, Buyer shall not be required to obtain TAN for TDS compliance. In place of TAN, TDS can be deposited with PAN now.
Impact on Non Residents (NRIs, OCIs etc): It will enable the Non-residents to find the buyers easily (as due to TAN many buyers do hesitate buying property from Non-residents). Transaction can be completed faster. Buyer TDS compliance will be simpler and hence it will save time and cost for both the parties.
Extension of Period for Filing Revised Return – By Further 3 Months
Present Law: Income Tax Return can be revised upto Dec 31 of the assessment year i.e. within 9 months from the end of respective Financial Year.
Proposed Law: Now, this 9 months window is extended to 12 months. Hence, revision of ITR is possible till March 31 of the assessment year.
Impact on Non-residents: Sometime, due to various factors, there is a requirement of modifying the ITR by filing Revise ITR. Now, NRIs will get more time to revise their ITR and they can even wait for their travel to India to revise the ITR. This will reduce the tax litigation also.
Reduction in TCS Rates
Present Law: There is a TCS or 5% on LRS remittance (exceeding Rs 10 Lakh) for medical or educational purposes. Further, on foreign tours present TCS is 5% (upto Rs 10 Lakh expense) or 20% (for expense exceeding 10 Lakh).
Proposed Law: TCS on medical or educational purposes has been reduced from 5% to 2%. Similarly, TCS on foreign tours has also been reduced to straight 2%.
Impact on Non-residents: NRI students and other NRIs who are being sent funds from their parents or relatives in India were getting less liquidity for their education/medical purposes as lot of amount was stuck in TCS. Now, there will be more liquidity for them as TCS is reduced. So, a welcome change for NRIs OCIs.
Foreign Assets And Income Amnesty Scheme – FAST-DS
In her budget proposals, the Honourable Finance Minister has provided a voluntary compliance relief window for small taxpayers who could not report their foreign income or assets. A scheme is provided named as Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS) 2026. This amnesty scheme will be a big relief for taxpayers from the Black Money Act harsh provisions. This scheme provides amnesty in two categories as under
Category 1 – Undisclosed value of Income or Foreign Assets does not exceed Rs 1 Crore as on March 31, 2026: Pay Aggregate of tax i.e. (a) 30% of the undisclosed foreign assets value as on March 31, 2026 and (b) 30% of undisclosed foreign income and (c) an amount equal to (a)+(b). Hence, in nutshell, a total of 60% of unreported foreign income and foreign assets.
Category 2 – Undisclosed value of Foreign Assets does not exceed Rs 5 Crore: Pay Rs 1 Lakh as one-time fee. This is the case where income was already declared in earlier ITRs or foreign assets were acquired when the assessee was a Non-resident.
Impact on Taxpayers (including Returning NRIs, OCIs): It will provide an opportunity to eligible small taxpayers (i.e. holding ESOPs or RSUs from foreign employers, dormant or low-value foreign bank accounts of former students, bank accounts or immovable property or other assets of returning non-residents, assets held by individuals on overseas deputation) to disclose their specified foreign income and assets, which was either not taxed or not reported in the ITR. On payment of specified tax/fee, the same can get immunity from penalty and prosecution provisions of Black Money Act 2015 provisions. This was a very needy scheme for those who unknowingly missed the reporting and were under radar of facing high tax & penalty and prosecution provisions. Returning NRIs are one who will benefit most out of it.
Exemption to Non-residents – Services Rendered In India Under a Notified Scheme
Proposed Law: Non-resident overseas professionals will get 5 year tax exemption on foreign income if Non-resident visits India under a Govt Notified Scheme. This proposal is proposed to attract overseas talent for Govt notified schemes. This benefit will apply to those individuals who are non-residents for a period of consecutive 5 years immediately preceding the year in which they first visit India under the Govt notified scheme.
Impact on Non-residents: NRI who are interested to work for Indian Govt or India, but they did not want to pay tax on their foreign income. Now, they can work in India or for the Govt of India under the notified scheme and avoid paying taxes on their foreign income.
Budget 2026 Impact and Significance For NRIs, OCIs, Seafarers
Budget 2026 has brought many proposals which will be directly benefitting the Non Residents i.e. NRIs, OCIs, Seafarers, Other Non-Residents. This article prepared by S Lohia & Associates NRI Team will be helpful in clarifying their various questions as under:
- What are the budget proposals on tax rates for NRIs, OCIs for FY 2026-27? Is there any additional tax saving in terms of tax payable provided in Budget 2026 to Non Residents?
- Is there any extended time limit provided for NRIs in Budget 2026 for filing their ITR for previous years?
- What are the TCS relaxations for foreign going students and travellers in Budget 2026?
- Need a Tax Consultant for NRIs, Non Resident matters in Delhi, Mumbai, Bangalore, Chennai, Other parts of India who can advise in relation to Budget 2026 provisions?
FAQs – Budget 2026 Impact On Non Residents – NRIs, OCIs
Ans – In this budget, the honourable FM has understood some practical difficulties and proposed a welcome change for Non-residents selling an immovable property in India. Now, buyer need not to apply TAN when the seller is a Non-resident. Earlier due to TAN requirement, many buyers were used to show their unwillingness to buy property from Non-residents. Now, TAN requirement has been replaced with PAN. Hence, buyer can pay TDS with the help of PAN like resident seller transaction. It will facilitate the transaction between buyer and non-resident seller.
Ans – Yes. In the present budget, the honourable FM has announced that TCS on LRS remittance will be reduced from 5% to 2% if the purpose of remittance is education. Hence, in your case TCS will be 2% as your remittance purpose is for son education.
NRI Tax, RBI Laws Services – Various Topics – By S Lohia NRI Matters Team
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