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The national blockade since March 25 and the cancellation of international flights to contain the spread of COVID-19 has forced non-resident Indians (NRIs) and foreigners to extend their stay in India.
There were fears that this prolonged stay could lead these people to become Indian residents under Section 6 of the Income Tax Act.
“Considering several representations received from people who had to extend their stay in India due to the blockade and suspension of international flights, expressing concern that they will be required to file tax returns as Indian residents, Minister of Finance Nirmala Sitharaman today it allowed for discounting of the extended stay period in India for the purpose of determining residence status, “said an official statement.
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The ministry further stated that as the blockade continues during the financial year 2020-21 and it is still unclear when international flight operations will resume, a circular excludes the period of stay of these people until the date of normalization of international flight. Operations, for the determination of the residential status for the financial year 2020-21, will be issued after the flights are resumed.
In a circular, the Central Direct Tax Board (CBDT) said that to avoid real difficulties in such cases, in order to determine the 2019-20 residential status of a person who has come to India on a visit before March 22. , 2020, and was unable to leave India before March 31, 2020, their period of stay in India from March 22 to March 31, 2020 will not be considered.
In cases where such persons have been quarantined in India due to COVID-19 as of March 1, 2020 and have departed on an evacuation flight on or before March 31, 2020, or have been unable to leave India on or before March 31, 2020. , your period of stay from the beginning of your quarantine until your departure date or March 31, 2020, as the case may be, will not be taken into account to determine the status of residence.
When the individual has departed on an evacuation flight on or before March 31, 2020, their period of stay in India from March 22, 2020 until their departure date will not be considered.
The status of a person, whether residing in India or not a resident or ordinary non-resident, depends, among other things, on the period during which the person remains in India for one year.
Under IT laws, for the 2019-20 fiscal year, people staying in India for 182 days or more in a fiscal year or 60 days or more in a fiscal year and at least 365 days in the last 4 fiscal years are They will be considered residents of India for the purpose taxes and consequently their global income becomes taxable.
“This is a very welcome and long-awaited circular, which takes into account the concerns of the NRIs and other foreigners who arrived in India before March 22, 2020, but were unable to return due to the imposition of blocking and suspension of international flights. “Nangia Andersen Consulting Director Shailesh Kumar said.
“Currently, this circular addresses residential status only for fiscal year 2019-20, and therefore excludes the period until March 31, 2020 only. One can expect a similar circular for fiscal year 2020-21, providing exclusion from the closing period for fiscal year 2020-21 as well to determine residential status, “he added.
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