The measure is seen as a strategic step to attract global talent, strengthen India’s manufacturing ecosystem, and boost knowledge transfer to domestic industries
India’s Union Budget 2026–27 has introduced a significant tax incentive aimed at attracting non-resident Indian (NRI) professionals and global experts to work in the country. The new measure offers a five-year tax exemption on overseas income for eligible professionals who come to India under government-notified schemes.
Under this proposal, NRI professionals who relocate to India for specific projects or assignments will only be taxed on income earned within India. Any income generated outside India during this five-year period will not be subject to Indian tax, even if the individual resides in the country. This move is expected to reduce a major tax burden that often discourages skilled professionals from working in India on a temporary or project basis.
To qualify for the exemption, individuals must have been non-residents in India for the five financial years preceding their move. The benefit applies only to those working under government-approved schemes designed to bring specialised talent into India, particularly in sectors such as technology, consulting, manufacturing, and infrastructure. The policy also aims to encourage NRIs involved in supplying capital goods or supporting manufacturing supply chains under initiatives like “Make in India.”
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Normally, extended stays in India can make an individual liable for tax on their global income
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The new rule removes this concern for a defined period, offering clarity and predictability for tax planning. However, Indian-source income will continue to be taxed during the exemption period
After the five-year window ends, professionals will be taxed under standard Indian tax rules. This may include taxation on foreign income if their residential status changes. Experts advise NRIs considering long-term relocation to plan carefully for the post-exemption period.
