Budget 2026 Eases Compliance for NRI Property & Investments

India’s Union Budget 2026–27 brings important reforms aimed at simplifying compliance requirements for Non-Resident Indians (NRIs) and overseas investors, while widening access to Indian equity markets. The measures are designed to reduce procedural hurdles in property transactions and create smoother investment channels for overseas participation in India’s financial markets.

Compliance Relief in Property Transactions

A major reform announced in the Budget removes the requirement for resident buyers to obtain a Tax Deduction and Collection Account Number (TAN) when purchasing immovable property from a non-resident seller.

Earlier, buyers were required to obtain TAN even for a single property transaction in order to deduct and deposit Tax Deducted at Source (TDS), creating additional compliance hurdles. Under the new proposal, TDS reporting will now be done using the buyer’s Permanent Account Number (PAN), bringing such transactions in line with property deals between resident parties.

The change will come into effect from October 1, 2026, significantly simplifying procedures for individual homebuyers and improving transaction efficiency in NRI property sales.

Explaining the proposal, Finance Minister Nirmala 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”.

The move is expected to reduce delays and compliance friction in transactions involving NRI-owned properties, enabling smoother deal closures across markets.

Expanded Route for Investment in Indian Equities

The Budget also widens access for overseas investors to participate directly in Indian equity markets under the Reserve Bank of India’s Portfolio Investment Scheme (PIS).

Persons Resident Outside India (PROIs), including NRIs and foreign nationals, will now be able to invest directly in listed Indian companies through designated banking channels in line with FEMA regulations.

Investment limits have also been revised:
● Individual investment cap increased to 10% from 5% of a company’s paid-up capital.
● Aggregate investment limit for all such investors raised to 24% from 10%.
● These limits apply to listed shares and convertible debentures purchased on recognised stock exchanges.

The measures aim to diversify foreign capital sources, deepen investor participation, and support capital inflows at a time when foreign portfolio investment flows have shown volatility.

Impact on Real Estate and Capital Markets

For the real estate sector, compliance relaxation is expected to ease secondary market transactions involving NRI sellers, improving liquidity and helping buyers complete deals faster.

For capital markets, wider participation from overseas investors could enhance liquidity and broaden the investor base, contributing to stronger market depth and long-term stability.

The Road Ahead

While the Budget does not provide direct fiscal incentives, it clearly signals a policy direction focused on reducing procedural hurdles and making India’s investment environment more globally accessible.

The real impact will now depend on timely implementation and operational clarity from regulators and banks to ensure the reforms translate into practical benefits for investors.

Budget 2026 may not bring immediate relief to every sector, but it clearly moves India toward a more investor-friendly and globally connected property and capital market environment.

By Sana Khan
Executive Editor, Realty Quarter
Mumbai