TheNRIGuide — Your Complete Guide to Life as an NRI

The Union Budget 2026-27, presented on February 1, 2026, introduced several changes that directly affect Non-Resident Indians (NRIs) and OCI cardholders. From reduced TCS on overseas remittances to simplified property transaction rules, here is a complete breakdown of what changed and what it means for you.

Summary of Key Budget 2026-27 Changes for NRIs

| Change | Previous Rule | New Rule (Effective April 1, 2026) | |---|---|---| | TCS on overseas tour packages | 5% (above ₹7 lakh) | Flat 2% | | TCS on education remittances (LRS) | 5% | 2% | | TCS on medical remittances (LRS) | 5% | 2% | | TCS on other LRS remittances | 20% (above ₹7 lakh) | 20% (unchanged) | | TAN for NRI property transactions | Required | No longer required (PAN sufficient) |

1. TCS on LRS Overseas Remittances: Big Reduction

The Liberalized Remittance Scheme (LRS) allows Indian residents to remit up to USD 250,000 per financial year abroad. Banks collect TCS (Tax Collected at Source) — a form of advance tax — on these remittances.

Reduced TCS Rates from April 1, 2026

Education remittances (for studying abroad):

Old rate: 5% (on amounts above ₹7 lakh/year)
New rate: 2% flat
Impact: A student with ₹30 lakh tuition remittance per year saves ₹90,000 in upfront TCS

Medical treatment abroad:

Old rate: 5% → New rate: 2%
Reduces cash flow burden for families sending money for overseas medical care

Overseas tour packages:

Old rate: 5% (above ₹7 lakh) → New rate: Flat 2% (no threshold)
Note: Threshold removal means small bookings now attract TCS too

General LRS (investments, gifts, maintenance of relatives abroad):

Rate: 20% (above ₹7 lakh) — unchanged

Important: TCS is not a final tax — it is a credit claimable against tax liability or as a refund when filing Indian ITR.

For NRIs: TCS on LRS applies to outward remittances from India. As an NRI sending money into India, your inward remittance is not subject to LRS TCS.

2. No TAN Required for NRI Property Transactions

Previously: When an NRI sold property in India, the Indian buyer needed to:

Obtain a TAN (Tax Deduction Account Number) from the Income Tax Department
Deduct TDS under Section 195 and deposit it using the TAN
File TDS returns (Form 27Q) using the TAN

From April 1, 2026: PAN-based Form 26QB payment is sufficient — no TAN required. This is the same simplified process used for resident Indian property transactions, removing 2–4 weeks of processing delay.

3. Updated Income Tax Slabs (New Regime, FY 2026-27)

| Income Range | Tax Rate | |---|---| | Up to ₹4,00,000 | Nil | | ₹4,00,001 – ₹8,00,000 | 5% | | ₹8,00,001 – ₹12,00,000 | 10% | | ₹12,00,001 – ₹16,00,000 | 15% | | ₹16,00,001 – ₹20,00,000 | 20% | | ₹20,00,001 – ₹24,00,000 | 25% | | Above ₹24,00,000 | 30% |

Section 87A rebate: Tax rebate up to ₹60,000 for income up to ₹12,00,000 under the new regime — effectively zero tax for residents with income below ₹12 lakh.

NRI note: Section 87A rebate generally does not apply to NRIs whose India income consists only of capital gains, dividends, or other special-rate income. Confirm eligibility with a tax advisor.

4. Capital Gains Tax Rates (In Effect from FY 2025-26)

Announced in Budget 2024-25 but fully in force for FY 2025-26 returns (AY 2026-27):

Equity and equity mutual funds:

LTCG (>12 months): 12.5% on gains above ₹1.25 lakh/year
STCG (≤12 months): 20%

Real estate (NRI sellers):

LTCG (>24 months): 12.5% without indexation (indexation option removed in Budget 2024)
STCG: Slab rates

Debt mutual funds and bonds: All gains at slab rates (LTCG indexation benefit removed in 2023)

5. NRI-Specific Announcements

ITR Filing Simplification: Proposed lighter-touch Form ITR-2 pre-population from Form 26AS/AIS data for NRIs with only Indian investment income.

NRI Senior Citizens and TDS on Interest: NRIs above 60 with NRO FD interest above ₹50,000/year face 30% TDS — the enhanced ₹1 lakh threshold for resident senior citizens does not apply to NRIs. No change in Budget 2026.

NRI Philanthropy: Streamlined FCRA (Foreign Contribution Regulation Act) processing for NRI donations to registered Indian NGOs and cultural organizations.

What Did NOT Change in Budget 2026

DTAA benefits: Continue in force; Tax Residency Certificate (TRC) + Form 10F still required to claim treaty benefits
TDS on dividends: NRIs continue to pay 20% TDS (reduced to 10–15% under applicable DTAAs)
NRO interest TDS: Continues at 30% — no change
NRE/FCNR interest: Continues to be tax-free in India

Action Items for NRIs Based on Budget 2026-27

LRS inward remittances: If family in India sends money to you under LRS (maintenance, gifts), they face 20% TCS above ₹7 lakh. They should file ITR to claim TCS credit as a refund.
Property sale planned: Use PAN-based Form 26QB (no TAN) from April 1, 2026. Work with a CA for smooth execution.
LTCG optimization: The ₹1.25 lakh annual LTCG exemption on equity resets every financial year. Spread equity redemptions across years to maximize this.
Equity portfolio — tax-loss harvesting: With STCG at 20%, consider harvesting losses before March 31, 2026 to offset gains.
ITR filing deadline: For FY 2025-26 (AY 2026-27): July 31, 2026 (standard); October 31, 2026 (if audit required); December 31, 2026 (belated return with ₹5,000 penalty under Section 234F).

Frequently Asked Questions

Q: Does the zero-tax benefit for income up to ₹12 lakh apply to NRIs?

The new tax slabs apply to NRIs. However, the Section 87A rebate (making income up to ₹12 lakh effectively zero-tax) generally does not apply to NRIs whose Indian income consists only of capital gains, dividends, or special-rate income.

Q: I am an NRI and I remit money to my parents in India. Do TCS changes affect me?

No. TCS under LRS applies to outward remittances from India to abroad. As an NRI sending money into India, your inward remittance is not subject to LRS TCS.

Q: I sold property in India in January 2026. Do the new TAN rules apply?

The TAN removal applies from April 1, 2026. For transactions completed before that date, the old TAN requirement applied.

Q: When do I need to file ITR for FY 2025-26 as an NRI?

Standard deadline: July 31, 2026. With audit: October 31, 2026. Late filing (belated return): December 31, 2026 with ₹5,000 penalty under Section 234F.

Q: My NRI rental income from India — did taxes change in Budget 2026?

No. Rental income taxation for NRIs (30% TDS by tenant above threshold; 30% standard deduction; slab-rate tax on net income) was unchanged in Budget 2026-27.

Union Budget 2026-27 for NRIs: Tax Changes, TCS Cuts & What Changed