In a big win for Indians living abroad, Finance Minister Nirmala Sitharaman announced that Non-Resident individuals will be allowed to invest more freely in equity instruments.
While presenting the Budget for 2026-2027, Sitharaman said, “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% to 10%, with an overall investment limit for all individual PROIs to 24%, from the current 10%.”
The previous budget had announced major income tax changes that affect Non-Resident Indians and resident taxpayers. The focus was on easier compliance, revised tax slabs, higher exemptions, and simpler rules for remittances, rental income, and property transactions. The Budget also updated NRI residency rules and global income taxation.
To support overseas education, last year’s Budget had removed Tax Collected at Source on education loans taken under the Liberalised Remittance Scheme. Families sending money abroad for education through approved loans no longer face TCS, reducing the cost of foreign education for Indian students. The limit for tax-free family remittances under LRS was raised. Individuals can now transfer up to Rs. 10 lakh to family members abroad without TCS. Transfers above this limit will attract TCS at 20 percent of the excess amount.
Rental income rules were also eased in the previous budget. Taxpayers can now treat up to two houses as self-occupied. Earlier, only one house could be claimed as self-occupied, while others were taxed on notional rent. The new rule reduces tax burden for homeowners with multiple properties.
For property transactions, TDS rules remain different for residents and NRIs. Resident sellers attract 1 percent TDS if the property value exceeds Rs. 50 lakh. For NRIs, TDS is linked to capital gains and can be higher. Buyers must deduct and deposit the correct TDS within the required time. Homeowners had received additional relief with the option to claim two self-occupied properties as tax-free. This removed tax on deemed rental income for the second house. The Budget also increased the standard deduction for salaried taxpayers, offering further relief.
A key change for NRIs last year was the revised residency rule. Indian citizens earning more than Rs. 15 lakh from Indian sources are now treated as residents if they stay in India for 120 days or more in a financial year. Earlier, the limit was 182 days. This brought more high-income NRIs under Indian tax laws.
The previous budget had also tightened global income taxation. Indian citizens who are not taxed in any other country will be deemed residents of India, making their global income taxable in India. The move was aimed at preventing tax avoidance and widening the tax base.