By- Dharma Theja.T
Assistant Professor, Paari School of Business, SRM University -AP
In the Union Budget, Finance Minister,Smt. Nirmala Sitharaman outlined specific measures that directly affect NRIs, overseas travellers, students, and individuals remitting money abroad.
Property transaction relief
A major operational relief was made with respect to property transactions involving NRIs. Earlier, property buyers were required to obtain a TAN to deduct TDS and deposit the same while purchasing a property from an NRI. This added additional layer of compliance and delay. However, with effect from October 1, 2026, the existing TAN requirement is being replaced with a PAN-based process for resident buyers. This eliminates the need for separate TAN registration, eliminates delay in TAN registration andsignificantly simplifies NRI property sales.
TCS Reduction
Along with simplifying NRI property transactions, the budget also reduces the upfront tax burden on overseas spending and remittances. TCS (Tax Collected at Source) on overseas travel and remittances for education and health-related purposeshas now been reduced to 2%. Every year lakhs of Indian students travel abroad for higher studies which requires involves substantial remittances. Similarly, overseas medical treatment often requires urgent and unavoidable expenditure. A lower TCS significantly reduces immediate cash outflow.
In continuation, this relief extends to remittances under the Liberalised Remittance Scheme (LRS) as well. LRS applies not only to NRIs but also to residents who remitmoney from India to foreign countries. This change will directly benefit those families that are fundingoverseas education as well as individuals meeting medical expenses abroad.
There is also a relief given for individuals purchasing foreign tour packages. The TCS rate, which earlier ranged between 5% and 20% depending on slabs and transaction value, has now been reduced to 2% irrespective of the amount paid. This significantly reduces the upfront cost of international travels.
FEMA Review
Another important announcement relates to the review of the FEMA law. FEMA regulations govern cross-border transactions, reporting requirements, and movement of funds. The existing FEMA provisions have been creating difficulties for NRIs and have affected smoother financial transactions in India. A review indicates that the government is recognising these challenges and is open to reforming the framework.
Disclosure scheme
A limited six-month income and asset disclosure scheme has been introduced for NRIs. This scheme applies to two categories of taxpayers: those who failed to disclose foreign income or assets earlier, and those who disclosed them but made errors or omissions. However,this scheme has specific monetary limits. For those declaring their missed income or assets, for the first time, the scheme covers amounts up to ₹1 crore and for those seeking to correct existing disclosures, the threshold is higher, covering assets up to ₹5 crore. Given the complexity of foreign income reporting, this measure provides a practical and much-needed compliance reset.
Customs Duty
On the travel and passenger side, customs procedures have also been streamlined to reduce manual compliance.”Duty-free allowances for passengers arriving from abroad have been revised, and clarity has been provided that a new laptop can be brought along with personal effects, which is particularly helpful for students and working professionals.
Customs procedures have also been simplified through the introduction of online and app-based declaration and duty payment facilities, reducing dependence on manual processes.For individuals shifting residence from abroad to India, the duty-free entitlement for bringing household articles has also been revised, making relocation smoother.
Further, customs duty rationalisation has been announced by allowing a uniform customs duty for personal imports, including gifts. This brings consistency, especially for NRIs and frequent travellers who often carry personal items or gifts for family members.
NRI investment limits
The budget also proposed doubling the individual investment limit for NRIs in listed Indian companies from 5% to 10% and raising the aggregate limit to 24%. This is huge news for NRIs looking to invest in the Indian stock market. This facilitates higher NRI participation and could improve liquidity and long-term cash inflows.
In conclusion, the Union Budget announcements by Finance Minister Nirmala Sitharaman combine stability with meaningful relief. Reductions in TCS, simplification of customs and property-transaction procedures, extended compliance windows, and the proposed FEMA review signal a clear intent to address practical difficulties faced by NRIs. These measures are likely to improve cash flow, reduce procedural stress, and make cross-border financial interactions moreefficient.
