India Budget 2026: What NRIs in UAE need to know about investing, property sales, tax filings

Dubai: India’s Budget 2026 brings several measures that directly impact NRIs, including higher investment limits in Indian equities, simplified tax and compliance rules, reduced charges on overseas spending, and easier property transactions, making it easier for UAE-based Indians to invest, save, and send money abroad.

Taxpayers will be allowed to update income tax returns even after reassessment by paying an additional 10% tax. The time limit for revising returns has been extended with a nominal fee. Individuals filing ITR-1 and ITR-2 can continue to file returns until July 31, while non-audit cases and trusts will have time until August 31.

For UAE-based NRIs selling property in India, compliance will become simpler. Tax deducted at source (TDS) on such transactions will now be handled by the resident buyer, removing the earlier requirement linked to obtaining a TAN.

The Union Budget 2026 also introduced measures to ease the financial burden on NRIs sending money abroad for travel, education, or medical purposes.

The Finance Minister proposed cutting the Tax Collected at Source (TCS) on overseas transactions. The TCS rate on overseas tour packages has been reduced to 2%, down from 5–20%, with no minimum threshold, making foreign travel simpler and less costly for UAE-based NRIs.

For remittances under the Liberalised Remittance Scheme (LRS) for education or medical expenses, the TCS rate has also been lowered from 5% to 2%, easing costs for families sending funds abroad.

A new scheme for small taxpayers grants immunity from prosecution for NRIs holding non-immovable foreign assets under Rs2 million (Dh80,000), allowing them to regularise compliance without fear of legal action.

Union Budget 2026 has also made it easier for NRIs to invest larger amounts in Indian listed companies. Under the Portfolio Investment Scheme, the investment cap for an individual Person Resident Outside India (PROI) — a category that includes NRIs and PIOs — has been raised from 5% to 10%.

At the same time, the overall limit for all PROIs investing in a single listed company has increased from 10% to 24%. For UAE-based NRIs, this means more room to build long-term equity exposure to Indian companies without breaching regulatory limits.

The Budget does not introduce new investment channels. NRIs can continue investing in Indian companies through existing routes such as foreign portfolio investment (FPI) or foreign direct investment (FDI). The key change is the higher ownership ceiling, which allows overseas Indians to take larger stakes in listed companies.

The higher investment limits align with the government’s broader push to position Indian equities as a long-term allocation for global and NRI investors. By allowing greater participation from overseas Indians, the move is expected to add depth and stability to the equity market over time, provided compliance and tax rules remain predictable.

The Finance Minister confirmed that the new Income Tax Act will come into effect from April 1, marking the next stage of India’s ongoing tax reforms.