Budget 2026 for non-residents: Income tax exemptions and benefits announced by FM - Full list

Finance Minister Nirmala Sitharaman unveiled several measures for non-resident Indians (NRIs) in her Union Budget 2026 speech on Sunday, February 1. The proposals aim to make it easier for NRIs to invest in Indian equities, simplify property transactions, and reduce compliance hurdles. Here is a closer look at what the Budget has in store for non-residents.

1. Portfolio investment scheme

In a move that can help boost equity capital market liquidity, the government on Sunday proposed allowing Indian non-residents to invest in domestic stocks through the portfolio investment scheme (PIS).

"Individual Persons Resident Outside India (PROI) will be permitted to invest in equity instruments of listed Indian companies through the Portfolio Investment Scheme. It is also proposed to increase the investment limit for an individual PROI under this scheme from 5 per cent to 10 per cent, with an overall investment limit for all individual PROIs to 24 per cent, from the current 10 per cent," Sitharaman said in her speech.

"Today the FM has announced that the individual limit shall be enhanced from 5% to 10% and the aggregate limit for NRIs and OCIs shall be increased from 10% to 24%. However, even before this, a company could, by passing a special resolution, increase the aggregate limit for NRI/OCI holdings in the company from 10% to 24%. So, the real change announced by the FM today is only in the individual limit, which has been enhanced from 5% to 10%," said Vinod Joseph, Partner, Economic Laws Practice.

"Also, the 5% limit in Schedule III of the Non-Debt Rules applies to NRI/OCI stakes in debentures or preference shares of Indian companies also. The enhancement announced by the FM applies only to Indian equities," added Vinod Joseph,

##2. Foreign asset disclosure scheme

The government has proposed a one-time foreign asset disclosure scheme aimed at small taxpayers such as students, tech professionals, and relocated NRIs

"I propose to introduce a one-time 6-month foreign asset disclosure scheme for these taxpayers to disclose income or assets below a certain size," she said.

• Who did not disclose their overseas income or assets and

• Who disclosed their overseas income and/or paid due tax, but could not declare the asset acquired.

For category (A), the limit of undisclosed income/assets is proposed to be up to ₹1 crore. They need to pay 30 per cent of the Fair Market Value of the asset or 30 per cent of the undisclosed income as tax, and 30 per cent as additional income tax in lieu of penalty and would thereby get immunity from prosecution

“The scheme will remain open for six months, offering a defined window to regularise past non-disclosures. This initiative targets individuals who either failed to disclose overseas income and assets in earlier returns, or those who paid tax on income but could not report foreign assets. By introducing a threshold of up to ₹1 crore and a flat 30% payment on the fair market value, the move encourages voluntary compliance while strengthening financial transparency and regulatory discipline,” said Abhishek Soni, CEO & Co-founder, Tax2win.

3)TDS on the sale of immovable property by an NRI

"The new provision for TDS on immovable property sales by non-residents simplifies compliance by allowing deduction and deposit through the resident buyer’s PAN, removing the need for a separate TAN. This streamlines administration, reduces paperwork, and lowers procedural barriers for both buyers and non-resident sellers. By making the process more user-friendly, it could encourage transparency in high-value property transactions," said Manmeet Kaur, Partner at Karanjawala & Co.

4)  Minimum Alternate Tax (MAT)

Finance Minister Nirmala Sitharaman proposed tax reliefs to attract global talent and simplify taxation for non-residents.

“To encourage a vast pool of global talent to work in India for a longer period of time, I propose to provide exemption to global (non-India sourced) income of a non-resident expert, for a stay period of five years under notified schemes.

I propose to provide exemption from Minimum Alternate Tax (MAT) to all non-residents who pay tax on a presumptive basis. Accordingly, it is proposed to provide exemption to the global income (other than Indian-sourced income) to an expert who visits India and stays for a period of five years. The expert visiting India should have been a non-resident in the previous five years when he visits India and should be providing services under a notified Government scheme.

Exemption from MAT to non-residents availing presumptive taxation scheme: Non-residents who avail the presumptive scheme of taxation are exempt from applicability of Minimum Alternate Tax (MAT) provisions. It is proposed to extend such exemption from MAT to all non-residents who pay tax on a presumptive basis,” FM Sitharaman said.

Rajarshi Dasgupta, Executive Director – Tax, AQUILAW, comments: “The Union Budget 2026‑27 brings clarity on the Minimum Alternate Tax (MAT), easing the burden on companies while maintaining revenue neutrality. Key proposals include extending the carry-forward period for MAT credit, helping companies, especially in manufacturing and infrastructure, offset excess MAT against future liabilities. This reduces double taxation, improves cash flow, and encourages reinvestment, simplifying compliance and lowering the effective cost of doing business in India.”

5) Tax exemptions to boost toll manufacturing

Finance Minister Nirmala Sitharaman proposes tax exemptions to boost toll manufacturing and attract global talent to India.

“To provide fillip to toll manufacturing in India, it is proposed to provide exemption to any foreign company who provides capital goods, equipment and tooling to any toll manufacturer in a bonded zone who is engaged in manufacturing of electronic goods. The exemption is proposed for a period of five tax years beginning on 1st April, 2026.

Exemption to the global income (other than Indian sourced income) to an expert who visits India and stays for a longer period: To enable a vast pool of global talent to come and work in India for a longer period of time, there is a need to provide tax certainty to them that only their Indian sourced income will be taxed in India despite their long period of stay,” FM said.