India Budget 2026: What NRIs Need to Know About PAN & Property

Budget 2026 at a Glance: Key Changes for NRIs

1. TAN Requirement Removed for Property Buyers Purchasing from NRIs

Background: What TAN Was and Why It Was a Problem

When an Indian resident buys property from an NRI seller, they are required to deduct TDS (Tax Deducted at Source) at source under Section 195 of the Income Tax Act. The standard TDS rate on NRI property sales is 20% (plus surcharge and cess) on the capital gains portion, though lower rates apply under applicable DTAAs.

Before Budget 2026, the buyer needed a TAN to fill out Form 27Q (the quarterly TDS return for NRI payments) and deposit the TDS with the government. Obtaining a TAN required a separate registration, took time, and was something most individual property buyers had never done before. Many buyers — including NRI buyers of other NRI properties — found this a significant obstacle.

The result: slower property transactions, buyer reluctance, and instances where NRIs could not find willing buyers partly due to this compliance burden. This was particularly acute in Tier-2 cities where buyers were less familiar with TAN procedures.

What Changes Practically

From October 1, 2026:

• Buyers can deposit TDS using their PAN via Form 26QB (the same form used for resident Indian property transactions)
• No separate TAN registration is required
• The TDS certificate (Form 16B) can still be generated and handed to the NRI seller
• NRI sellers use Form 16B to claim credit for the TDS deducted when filing their Indian tax returns
• This change should significantly speed up property closings involving NRI sellers

2. NRI Equity Investment Limit Raised to 10% Per Company

Under the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, NRIs and OCIs could previously hold up to 5% of the paid-up capital of any listed Indian company on the stock exchanges through the Portfolio Investment Scheme (PIS). Budget 2026 doubles this limit to 10% per company.

The aggregate NRI/OCI limit — the total permissible holding by all NRIs and OCIs combined — remains at 24% of paid-up equity capital unless the company's board passes a resolution raising it to the sectoral cap.

Practical Implications

• NRIs who are active equity investors can now take larger positions in individual companies they have conviction in
• This opens up meaningful participation in mid-cap and small-cap companies where the previous 5% limit was more constraining
• PAN is required for all PIS (Portfolio Investment Scheme) accounts — without it, no NRI equity investment is possible
• NRIs who already have PIS accounts should check with their brokers on the updated limit application to existing holdings

3. TCS on Foreign Remittances Reduced to Flat 2%

The Tax Collected at Source (TCS) on outward remittances under the Liberalised Remittance Scheme (LRS) has been a source of significant friction and cost for NRIs repatriating funds from India. The previous regime charged 20% TCS on remittances above ₹7 lakh in a financial year (reduced from the initial 20% proposal due to widespread protest, but still substantial).

Budget 2026 replaces the tiered structure with a flat 2% TCS on all outward remittances regardless of amount. This is a significant reduction for anyone remitting above ₹7 lakh annually.

NRI Relevance

NRIs repatriating rental income, sale proceeds from property, dividends, or any other Indian-source income will benefit from this change. The reduced TCS rate improves cash flow during the year even if the ultimate tax position remains unchanged.

PAN is required for all LRS remittances above ₹7 lakh. Banks will request your PAN for Form 60 declaration or direct PAN verification before processing large outward remittances.

4. Foreign Asset Disclosure Scheme (FAST-DS)

Budget 2026 introduces a one-time voluntary disclosure scheme — the Foreign Asset Settlement and Tax Declaration Scheme (FAST-DS) — available from July 1 to September 30, 2026. This scheme allows NRIs and returning NRIs to disclose foreign assets that were not previously declared, with reduced penalty rates in exchange for voluntary disclosure.

Participation requires:

• A valid, operative PAN card
• Filing of Form FAST-DS-1 through the Income Tax portal
• Payment of applicable tax and reduced penalties within the scheme window
• An NRI returning to India with undisclosed foreign accounts or assets should take careful professional advice on whether FAST-DS is beneficial in their specific situation

This is an area where qualified NRI tax counsel is essential. The disclosure scheme offers one-time amnesty but closes September 30, 2026.

5. TDS on NRI Property Rental Income: Treaty Rates Codified

Previously, NRIs earning rental income from Indian property had to separately file for treaty benefits to reduce the standard 30% TDS rate. Budget 2026 codifies DTAA-aligned rates directly into the TDS framework, so that tenants of NRI landlords can apply the correct treaty rate without requiring a separate Lower Deduction Certificate (LDC) from the tax officer in straightforward cases.

This change reduces the administrative burden for NRI landlords who rent property to Indian tenants. It does not eliminate the LDC process entirely — complex cases and first-time treaty claims may still require an LDC — but simplifies the majority of standard cases.

6. Why PAN Becomes Even More Central in 2026

Every change in Budget 2026 that affects NRIs runs through the PAN system:

• Property TDS (new simplified form) requires seller's PAN
• Equity investment through PIS requires PAN
• LRS remittances require PAN for large amounts
• FAST-DS participation requires PAN
• Treaty rate TDS requires PAN to identify the taxpayer and apply the correct DTAA

The Indian government's ongoing digitisation of the tax infrastructure — including PAN 2.0 (see our PAN 2.0 guide) — means that PAN is increasingly the single identifier through which all NRI financial activity in India is tracked and processed. An inoperative or missing PAN is a material obstacle to every financial transaction.

Action Checklist by Situation

If You Have Property in India

• Verify your PAN is valid and operative before listing property for sale (check at incometax.gov.in)
• Ensure your PAN reflects your current legal name (as per your passport) — mismatches cause TDS credit issues
• Brief any prospective buyers that TAN is no longer required from October 1, 2026 — they use Form 26QB with their PAN
• If you earn rental income, ask your CA about the new treaty-aligned TDS rates effective April 1, 2026

If You Have Equity Investments in India

• Confirm your PIS (Portfolio Investment Scheme) account is KYC-compliant with current PAN
• Check updated per-company holding limits with your broker (now 10% from April 1, 2026)
• Review existing positions to see if higher limits open any new opportunities

If You Plan to Remit Funds from India

• Confirm your PAN is in order before initiating large LRS remittances
• Note that TCS drops from 20% to 2% effective April 1, 2026 — plan large remittances accordingly
• File Indian tax returns annually to claim TCS credit or refund

If You Have Undisclosed Foreign Assets

• Consult a qualified NRI tax professional before the FAST-DS window opens July 1, 2026
• Obtain or verify your PAN well in advance — it is required for scheme participation
• Note the scheme window closes September 30, 2026 — do not delay