Union Budget 2026: Govt eases compliance for NRIs in property and investments—explained

The Union Budget 2026-27 proposed a series of measures impacting Non-Resident Indians (NRIs) and other overseas individuals, easing compliance in property transactions and widening access to Indian equity markets.

Finance minister Nirmala Sitharaman presented her ninth consecutive Union Budget on Sunday, becoming the first finance minister in India to achieve this milestone, and also the first to present a Union Budget on a Sunday.

TAN requirement dropped for NRI property deals

A major compliance relief has been proposed for individual home buyers purchasing immovable property from non-residents.

Resident individuals or Hindu Undivided Families (HUFs) will no longer be required to obtain a Tax Deduction and Collection Account Number (TAN) to deduct and deposit Tax Deducted at Source (TDS). Instead, TDS will be reported using the buyer’s Permanent Account Number (PAN), similar to transactions between two resident parties. The change will come into effect from October 1, 2026.

Currently, buyers purchasing property from non-residents must obtain a TAN even for a single transaction, a requirement that does not apply when both buyer and seller are residents. TAN is generally issued to corporate entities, while PAN is used by individuals.

Explained: Proposed TAN exemption

Explaining the proposal in her Budget speech, Sitharaman said, "TDS on the sale of immovable property by a non-resident is proposed to be deducted and deposited through the resident buyer's PAN-based challan instead of requiring TAN".

As per the annexure to the Budget speech, a resident individual or HUF will not be required to obtain a TAN to deduct tax at source on consideration paid for the transfer of immovable property by a non-resident under section 393. The deduction will be reported by quoting PAN, in the same manner as similar transactions between two residents.

The Budget memorandum noted that Section 397 (1)(a) of the Income Tax Act requires every person deducting or collecting tax to apply for a TAN, while clause (c) of the same section provides exceptions where TAN is not required. While buyers are exempt from obtaining TAN when purchasing property from resident sellers, the requirement continued when the seller was a non-resident.

“This creates unnecessary compliance burden for the buyer, as he would need TAN for a single transaction,” the memorandum said.

To reduce this burden, the government has proposed amending section 397(1)(c) of the Act to exempt resident individuals or HUFs from obtaining a TAN for deducting TDS on the transfer of immovable property under section 393.

New route to invest in Indian equities

The Budget has also proposed measures to widen equity market access for NRIs and other overseas individuals. The Union Budget 2026 has opened a new route for overseas individuals to invest directly in Indian equities by allowing Persons Resident Outside India (PROIs), including NRIs and foreign nationals, to buy listed shares under the Reserve Bank of India’s Portfolio Investment Scheme (PIS).

Under the proposal, the individual investment cap for PROIs has been increased to 10% of a company’s paid-up capital from 5%, while the aggregate limit for all such investors has been raised to 24% from 10%. These limits will apply to shares and convertible debentures purchased on recognised stock exchanges.

Until now, overseas individuals largely accessed Indian equities through foreign portfolio investor or foreign direct investment routes, both of which involved registration and compliance requirements. The expanded PIS framework will now explicitly cover all PROIs, allowing investments on repatriation and non-repatriation bases through designated banks, in line with FEMA rules.

Officials said the changes follow discussions between the Reserve Bank of India and the Securities and Exchange Board of India since early 2025, aimed at widening the investor base and supporting inflows amid sustained foreign portfolio investor outflows.

The government expects the measures to diversify foreign capital sources, deepen market participation, and improve ease of doing business.