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As the Union Budget 2026 approaches, expectations are rising among Non-Resident Indians (NRIs) and domestic homebuyers alike—especially around real estate–related tax rules. The current framework governing property transactions involving NRIs is widely considered complex, time-consuming, and costly. With growing demand for regulatory clarity, many are hoping the upcoming budget will introduce reforms that simplify transactions, ease tax compliance, and unlock benefits for both sellers and buyers.

Why Budget 2026 Matters for NRIs and Homebuyers

Real estate continues to be a preferred investment avenue for NRIs, whether for long-term wealth creation or future settlement in India. However, selling property in India as an NRI often turns into a cumbersome process due to high Tax Deducted at Source (TDS) rates and extensive compliance requirements. These challenges also spill over to buyers, making NRI-linked property deals less attractive despite good opportunities.

Budget 2026 is therefore being closely watched for potential policy tweaks that could balance tax collection with ease of doing business in real estate.

Resident vs NRI: The Big TDS Gap

Under current tax laws, when a resident Indian sells a property worth more than ₹50 lakh, the buyer is required to deduct 1% TDS on the transaction value. In contrast, when the seller is an NRI, the TDS burden increases significantly.

For NRIs, buyers must deduct TDS based on capital gains tax rates—around 12.5% for long-term capital gains and up to 30% for short-term gains, plus applicable surcharge and cess. This often results in a substantial portion of the sale proceeds getting blocked, directly impacting the seller’s cash flow.

Buyers Face Compliance Headaches Too

Buying property from an NRI is not just expensive—it is procedurally complex. The buyer must obtain a Tax Deduction and Collection Account Number (TAN), deduct the correct TDS amount, deposit it with the government, and file e-TDS returns within stipulated timelines.

For individual homebuyers, this compliance-heavy process can be intimidating and error-prone. Any mistake can attract penalties, notices, or delays in property registration. Industry experts believe Budget 2026 could introduce a simplified mechanism—similar to a single challan-cum-statement system—to reduce the burden on buyers.

Low-Tax Deduction Certificate: Relief with Delays

NRIs do have an option to apply for a Lower or Nil TDS Certificate to reduce excessive tax deduction. However, this process is often slow, paperwork-intensive, and unpredictable. In many cases, property deals get delayed or even cancelled because the certificate does not arrive on time.

A key expectation from Budget 2026 is to make this process fully digital, transparent, and time-bound, allowing transactions to close smoothly without unnecessary uncertainty.

How Homebuyers Could Benefit

If the government rationalizes TDS rates and simplifies compliance for NRI property sales, the benefits will extend beyond NRIs. Easier rules would encourage more NRI sellers to list their properties, increasing supply in the market. Higher supply could help moderate prices, offer buyers more choices, and reduce negotiation pressure.

Additionally, shorter transaction timelines and lower legal risks would improve buyer confidence, especially in resale markets dominated by NRI-owned properties.

What the Market Expects from Budget 2026

Key expectations from the upcoming budget include:

• Rationalization of TDS rates for NRI property sales

• Simplified compliance and reporting mechanisms for buyers

• Faster, digital processing of low-tax deduction certificates

• Streamlined remittance and tax refund procedures

If these reforms are announced, they could significantly boost NRI confidence, improve liquidity in the real estate sector, and make property transactions smoother for homebuyers.

The Bottom Line

Budget 2026 has the potential to be a turning point for NRI real estate transactions in India. By addressing long-standing tax and compliance challenges, the government can create a win-win situation—offering relief to NRIs while making life easier for domestic homebuyers. All eyes are now on the finance minister’s announcements, with the hope that clarity and simplicity will finally replace complexity in NRI property deals.