Union Budget 2026–27 has introduced some of the most NRI-friendly tax amendments and compliance relaxations in recent years. The Budget places strong emphasis on ease of compliance for NRIs, voluntary foreign asset disclosure, reduced litigation, decriminalisation of technical defaults, and smoother cross-border taxation.

For Non-Resident Indians (NRIs), returning Indians, RNORs, global professionals, overseas investors, and expatriates, Budget 2026 directly addresses long-standing pain points relating to:

• Liberalised Remittance Scheme (LRS) and TCS
• Foreign asset disclosure under Schedule FA
• FAST-DS 2026 foreign asset regularisation
• Revision and updating of Income Tax Returns
• Black Money Act exposure for NRIs
• Sale of property in India by NRIs
• Cross-border tax compliance and litigation

This blog explains the key Budget 2026–27 tax and compliance updates relevant to NRIs, in a simple, practical, and SEO-friendly manner.

Big Relief Under Liberalised Remittance Scheme (LRS) for NRIs

One of the most important NRI-related announcements in Budget 2026 is the rationalisation of Tax Collected at Source (TCS) under the Liberalised Remittance Scheme (LRS).

Key LRS & TCS Changes in Budget 2026

• TCS on LRS for education purposes reduced from 5% to 2%
• TCS on LRS for medical treatment abroad reduced from 5% to 2%
• TCS on overseas tour packages reduced to a flat 2%, without any monetary threshold

Why This LRS Change Is Important for NRIs

NRIs and their families frequently remit funds for:

• Children’s foreign education
• Medical treatment abroad
• International travel, relocation, and living expenses

Earlier, higher TCS resulted in:

• Significant cash flow blockage
• Mandatory Indian income tax return filing only to claim refunds
• Increased compliance burden

With lower TCS under LRS:

• Net remittance cost reduces
• Refund dependency reduces
• Cross-border remittances become smoother and tax-efficient

Extension of Time for Revision & Belated Filing of ITR – Major NRI Relief

Budget 2026 provides significant flexibility in Income Tax Return (ITR) compliance, especially beneficial for NRIs managing Indian tax filings from overseas.

Revised & Belated ITR Filing – What Has Changed?

• Time limit to revise or file belated ITR extended till 31 March
• Earlier deadline was 31 December
• Revision after December allowed with a nominal additional fee

Staggered ITR Due Dates Introduced

• ITR-1 and ITR-2 (Individuals, including NRIs) – 31 July
• Non-audit business cases & trusts – 31 August

Updated Returns – A Game Changer for NRIs

• NRIs can now file updated income tax returns even after reassessment proceedings begin
• Additional tax of 10% applies
• Updated return becomes binding for further proceedings

Practical Use for NRIs

This helps in cases involving:

• Missed foreign income reporting
• Incorrect DTAA claims
• Unreported overseas capital gains
• Errors in residential status
• Legacy compliance clean-up

FAST-DS 2026: One-Time Foreign Asset Disclosure Scheme for NRIs

The Foreign Assets of Small Taxpayers – Disclosure Scheme (FAST-DS 2026) is the single most important Budget 2026 announcement for NRIs and returning residents.

Who Should Consider FAST-DS 2026?

• NRI returning to India and RNORs
• Relocated professionals
• Students returning to India
• Startup founders and tech employees

NRIs holding:

• Foreign bank accounts
• Overseas shares & ETFs
• RSUs and ESOPs
• Foreign mutual funds

FAST-DS 2026 – Two Disclosure Categories

Category A: Foreign Income / Asset Not Disclosed

• Threshold: Up to ₹1 crore
• Tax payable:
  • 30% tax
  • 30% additional tax (in lieu of penalty)
• Complete immunity from penalty and prosecution

Category B: Income Disclosed, Asset Not Reported

• Asset value: Up to ₹5 crore
• One-time fee of ₹1 lakh
• Full immunity from penalty and prosecution

Why FAST-DS Is Critical for NRIs

• Provides a clean exit from Black Money Act exposure
• Covers Schedule FA non-compliance
• Time-bound opportunity — non-compliance later may lead to:
  • 120% penalties
  • Criminal prosecution
  • Long-term litigation

Black Money Act Relief for Small Foreign Assets Held by NRIs

Budget 2026 provides relief under the Black Money (Undisclosed Foreign Income and Assets) Act.

Key Relief

• No penalty and no prosecution for:
  • Non-immovable foreign assets up to ₹20 lakh
• Relief applies retrospectively from 1 October 2024

Who Benefits Most?

NRIs holding:

• Small overseas savings accounts
• Dormant brokerage or trading accounts
• Minor foreign investments from earlier employment

Sale of Property in India by NRIs – TDS Compliance Simplified

A long-standing issue in NRI property sale taxation has finally been resolved.

What Has Changed in Budget 2026?

• Resident buyer no longer required to obtain TAN
• TDS on property purchase from NRI can be deposited using PAN-based challan

Impact on NRI Property Transactions

• Faster execution of property sales
• Reduced compliance burden
• Smoother repatriation of sale proceeds
• Lower transaction delays

Reduced Litigation & Decriminalisation – Trust-Based Tax System

Budget 2026 strongly promotes trust-based taxation and reduced criminal exposure.

Key Litigation Reforms

• Assessment and penalty proceedings combined
• Technical defaults converted into fees instead of penalties
• Several offences decriminalised
• Immunity extended to certain misreporting cases

Why This Matters for NRIs

• Reduced fear of prosecution
• Faster closure of old assessments
• Predictable compliance outcomes

Other Important NRI-Relevant Budget 2026 Changes

• Form 15G / 15H filing through depositories
• MAT exemption clarified for non-residents under presumptive taxation
• Certain foreign experts eligible for global income exemption for up to 5 years
• Simplified prosecution framework under Income Tax Act, 2025

Conclusion: Budget 2026–27 Is a Landmark for NRI Tax Compliance

Union Budget 2026–27 represents a structural reset in NRI taxation and cross-border compliance.

It encourages:

• Voluntary foreign asset disclosure
• Lower litigation and prosecution risk
• Simplified remittance and property taxation
• Cleaner DTAA and Schedule FA compliance

For NRIs, returning Indians, and global taxpayers, this Budget offers a rare compliance reset opportunity—provided it is executed with proper planning and professional guidance.

Need Expert Help with NRI Tax & Foreign Asset Compliance?

Dinesh Aarjav & Associates is a 25+ year old Chartered Accountancy firm specialising in:

• NRI income tax filing in India
• Foreign asset disclosure & FAST-DS 2026
• LRS & overseas remittance planning
• Sale of property by NRI & TDS compliance
• Black Money Act risk mitigation

Also Read:

URGENT: Income Tax Notice for Foreign Assets, 401(k), RSUs or Overseas Accounts?

Streamlined Filing Compliance Procedures (SFOP) for NRIs: A Complete Guide

CBDT Launches 2nd NUDGE Campaign for Foreign Asset Disclosure | Critical Update for NRIs, Returning NRIs & Global Taxpayers

Foreign Tax Credit for NRIs and RNORs: ITAT Delhi’s Landmark Ruling in Aditya Khanna vs ITO