Budget 2026 Tax Changes: Capital Gains & HNI Strategies

02 Feb 2026

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The Union Budget 2026-27 delivered by Financial Minister Nirmala Sitharaman, with the focus on achieving the vision “Viksit Bharat” which aims to foster economic growth and social inclusion while maintaining stability. For High-Net-Worth Individuals this budget brings ease in compliance with tax laws, new investment thresholds and relaxation for specific overseas asset disclosures.Key Updates of Budget 2026-27

The fiscal deficit is estimated to be at 4.3% of GDP with Capital expenditure allocation at INR 12.2 lakh crore, highlighting the commitment of Government of India on Infrastructure development.

New Income Tax Act, 2025 set to apply from 1^st April 2026 aims to streamline tax laws for easier compliance. There are no changes in the income tax slab announced.

Development for high-speed rail corridors and City Economic Regions is one of the major focuses of this budget. Tier 2, cities and temple towns to be turned into growth hubs.

*Incentive of ₹100 crore for single issuance of municipal bonds of more than ₹1000 crore.*

Proceeds from buyback will be treated as capital gains instead of income from dividend.

What is the New Foreign Asset Disclosure Scheme?The foreign asset disclosure scheme introduced in the Union Budget 2026-27 states that taxpayers domestic and NRI, have a one-time six-month window to disclose their overseas assets and income which are more than INR 20 lakh in value. The scheme is structured into two primary categories.

Category A: This category is for taxpayers who have not disclosed their overseas income or assets at all. The limit for undisclosed income or assets under this category is INR 1 crore. These taxpayers will have to pay 30% tax on the Fair Market Value (FMV) of the asset or the undisclosed income, along with an additional 30% income tax in lieu of penalty, in order to get immunity from prosecution.

Category B: This category is for taxpayers who have disclosed their overseas income and/or paid due taxes but have not disclosed the particular asset acquired. The limit for asset value under this category is INR 5 crore. Immunity from penalty as well as prosecution will be available after paying a fee of INR 1 lakh.

Additionally, the budget provides immunity from prosecution with retrospective effect from October 1, 2024, for the non-disclosure of non-immovable foreign assets with an aggregate value of less than ₹20 lakh.Also Read: What is Union BudgetOpen DBS Treasures AccountTCS Changes for Overseas Travel and RemittancesBudget 2026-27 brings about major changes in Tax Collection at Source (TCS) to minimize the complexity of rates and ease cash flow problems. The key changes include:

Overseas Travel: The TCS rate applicable to overseas tour program packages is reduced from the earlier structure of 5% and 20% to a flat rate of 2%, without any maximum amount specified.

Remittances: For the Liberalized Remittance Scheme (LRS), the rate applicable to education and medical expenses (for amounts exceeding INR 10 lakh) is reduced from 5% to 2%. For LRS remittances other than those for medical and educational costs, the LRS system remains at 20%.

These changes aim to simplify the taxation system and improve the ease of living for taxpayers by reducing the initial tax incidence on certain high-value transactions.Buyback Taxation Changes Under Budget 2026Earlier, buyback proceeds were taxed as dividend income at slab rates of up to 42.74%. Budget 2026 changes this treatment as follows:

Buyback proceeds are now treated as capital gains for shareholders.

For shares held over one-year, long-term capital gains are taxed at 12.5%, with an exemption of INR 1.25 lakh per year.

Short-term gains remain taxable at 20%.

An extra buyback tax applies to promoters (22% for corporates, 30% for non-corporates), making buybacks more tax-efficient for individual investors and HNIs.

Smart Tax Strategies for HNIs in Budget 2026For HNIs, Budget 2026 offers key opportunities to optimise capital gains and investment taxes while maintaining compliance.

Use the FAST-DS window to disclose undisclosed overseas assets.

NRIs can now invest up to 10% in listed stocks under the Portfolio Investment Scheme (PIS).

Reassess equity portfolios as buybacks are now taxed as capital gains.

Subscribe to Sovereign Gold Bonds at original issue to retain tax exemptions.

Use the extended March 31 deadline for revised returns to optimise compliance.

Leveraging these strategies alongside a premium savings account by DBS Treasures can simplify tax planning and portfolio management for HNIs.Open DBS Treasures AccountConclusionBudget 2026 offers HNIs multiple avenues to optimise capital gains and investment taxes, from buyback planning to overseas asset disclosures. Strategic use of exemptions, revised TCS rules, and investment limits can enhance post-tax returns. Combining these insights with a wealth account by DBS Treasures helps HNIs manage liquidity, track investments, and plan taxes efficiently, making portfolio management simpler and more effective.*This article is based on publicly available information/news reports on Union Budget 2026-27 and is for informational purposes only. Please consult your advisor for financial/taxation matters, as DBS Bank does not advise on any tax aspects.