Budget 2026 Proposes Five-Year Tax Relief For Non-Resident Experts In Tech Sector
Union Budget 2026 introduces 5-year exemption on non-India sourced income for foreign experts under notified schemes to strengthen tech and innovation ecosystem.
India’s Union Budget 2026–27 unveiled a new tax incentive aimed at attracting global talent to the country’s burgeoning technology and innovation ecosystem, according to government proposals and industry reports. Under the measure, non-resident professionals will receive a five-year tax exemption on foreign-sourced income if they come to India to work under government-notified schemes, a move designed to enhance competitiveness in high-growth sectors such as electronics, semiconductors and advanced engineering.
The exemption applies specifically to income earned outside India and is intended to address a longstanding deterrent for foreign experts considering longer stints in the Indian market. Traditionally, non-resident professionals become taxable on their global income after meeting residential criteria, discouraging long-term assignments due to potential double taxation. The new policy exempts global income from Indian tax for up to five years for eligible individuals, thereby reducing uncertainty and financial barriers for overseas talent.
Eligibility for this tax break requires that the individual has been a non-resident for the five consecutive financial years immediately before their first visit to India for service provision under notified schemes. This criterion is designed to ensure that the incentive targets genuinely new entrants rather than frequent visitors or long-term residents seeking to benefit from tax arbitrage.
Industry leaders and sector analysts have welcomed the proposal as a positive step toward retaining and deploying foreign expertise in India’s sunrise industries. Companies in the semiconductor and electronics sectors, which often grapple with skill gaps, have lobbied for such reforms to ease the deployment of expatriate executives and technical specialists. The exemption is expected to make India a more attractive long-term destination for global talent.
However, analysts also caution that tax incentives alone may not fully bridge broader structural challenges, such as mandatory contribution requirements under the Employees’ Provident Fund Organisation (EPFO) and other compliance costs that could still deter foreign hires. Continued reforms in labour and social security frameworks may be needed to complement the new tax regime.
The tax measure is part of a broader Budget push to strengthen India’s position as a global technology and innovation hub. Other related initiatives include enhanced tax benefits for cloud service providers and safe harbour provisions for IT services, reflecting the government’s strategic focus on luring foreign investment and expertise across key digital and manufacturing sectors.
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