For UAE-based professionals and business leaders, financial decision-making often extends beyond borders to India, spanning equity investments, property transactions, overseas remittances for education and healthcare, and long-term family planning. India’s Union Budget 2026–27, presented by Finance Minister Nirmala Sitharaman, does not introduce sweeping tax cuts. Instead, it delivers something more consequential for the 32-million-strong Indian diaspora: a recalibration of how Non-Resident Indians (NRIs) are integrated into India’s economic framework.
By easing long-standing regulatory frictions across investments, property, remittances, and compliance, the Budget signals a shift away from viewing NRIs merely as remittance providers and towards positioning them as long-term capital partners in India’s growth story.
Travel, Education and Medical Remittances Become More Cost-Efficient
One of the most immediately felt changes for UAE-based families is the rationalisation of Tax Collected at Source (TCS) on overseas spending under the Liberalised Remittance Scheme (LRS).
- Overseas tour packages now attract a flat 2% TCS, replacing the earlier structure of 5% and up to 20%. This covers bundled expenses such as travel, accommodation and related services.
- Remittances for overseas education from India have been reduced from 5% to 2% TCS.
- Medical treatment abroad has also been aligned to the same 2% rate.
While TCS remains adjustable against final tax liability, the earlier higher rates often resulted in significant capital being blocked upfront. For UAE-based families funding tuition, healthcare or travel through Indian bank accounts, the lower TCS improves short-term liquidity, simplifies budgeting, and ensures funds are deployed more efficiently toward essential expenses rather than sitting idle with the tax authorities.
Property Sales in India: A Major Paperwork Bottleneck Removed
For NRIs, selling property in India has long involved procedural complexity—particularly for resident buyers, who were required to obtain a Tax Deduction and Collection Account Number (TAN) solely to deduct tax before releasing sale proceeds.
This additional compliance step frequently delayed transactions and, in some cases, discouraged buyers altogether.
From 1 October 2026, this changes materially:
- Resident buyers will be allowed to deposit the applicable TDS using their existing PAN, eliminating the need for TAN registration.
The impact is operationally significant. Property transactions involving NRIs are expected to move faster, with fewer compliance objections and less execution risk. For UAE-based owners considering divestment of residential or land assets in India, the reform places NRI-owned property on a more level footing with resident-owned assets, improving liquidity and marketability.
A One-Time Compliance Reset for Legacy Overseas Assets
Recognising the complexity of global careers, Budget 2026 introduces a Foreign Asset Disclosure Scheme (FAST-DS 2026)—a six-month amnesty window for NRIs to regularise past non-disclosures.
The scheme applies to:
- Dormant overseas bank accounts
- Legacy equity holdings
- Insurance policies or other financial interests
with an aggregate value of up to ₹20 lakh.
Eligible assets can be disclosed retrospectively with payment of the applicable tax or fee, without triggering the severe penalties or prosecution provisions under the Black Money Act.
For professionals who studied or worked abroad earlier in their careers and accumulated modest overseas assets that were unintentionally left undeclared, this offers a practical and time-bound route to clean up compliance positions and reduce long-term regulatory risk.
Expanded Scope for Direct Equity Investments in India
A key structural reform in Budget 2026 addresses long-standing constraints on direct NRI equity participation.
- The individual ownership cap for NRIs (Persons Resident Outside India) in a listed Indian company has been doubled from 5% to 10%.
- The aggregate cap for all such individual overseas investors in a single company has been raised to 24%, up from 10%.
Previously, active NRI investors were often forced to stop buying shares once the 5% threshold was reached, irrespective of conviction or fundamentals. The revised limits allow deeper exposure to high-growth sectors such as banking, technology, manufacturing and consumer goods.
For UAE-based NRIs who prefer direct stock selection over pooled investment vehicles, this enables more meaningful portfolio construction and long-term capital allocation without artificial regulatory ceilings. For high-net-worth individuals and family offices, it also opens the door to strategically significant, potentially board-influencing stakes.
Beyond Remittances: NRIs as Economic Partners
Taken together, the measures in Union Budget 2026 point to a broader policy shift.
Lower TCS reduces the friction of maintaining global family ties. Simplified property exits improve capital mobility. Expanded equity limits recognise NRIs as serious investors rather than peripheral participants. The compliance amnesty reflects a move toward a more trust-based tax regime. As one senior market analyst put it, the Budget marks “the end of the remittance era and the beginning of the investment era” for the Indian diaspora.
For UAE-based professionals and business leaders, the message is clear: India is no longer just a destination for savings parked from afar, it is actively inviting its global citizens to participate, invest and engage as long-term partners in its economic transformation.
