Clarifications On The Tax Relaxations In Respect Of Residency Owing To Covid-19
Jayesh Kariya, Partner – Corporate and International Tax, Infrastructure, Government and Healthcare
As you may be aware that in terms of the provisions of the Indian Income-tax Act, 1961, the status of an individual, as to whether he is resident in India or a non-resident or not ordinarily resident, is dependent, inter-alia, on the period for which the person is in India during a previous year or years preceding the previous year.
Relaxation for Financial Year 2019-20 on account of Covid-19:
Due to Covid-19 outbreak and to avoid genuine hardship, the Central Board of Direct Taxes (CBDT) has issued Circular (No. 11/2020, dated 8 May 2020) to relax certain conditions for determination of the residential status under Section 6 for previous year 2019-20. In respect of an individual who has come to India on a visit before 22 March 2020 and:
- has been unable to leave India on or before 31 March 2020, his period of stay in India from 22 March 2020 to 31 March 2020 shall not be taken into account; or
- has been quarantined in India on account of Covid-19 on or after 1 March 2020 and has departed on an evacuation flight on or before 31 March 2020 or has been unable to leave India on or before 31 March 2020, his period of stay from the beginning of his quarantine to his date of departure or 31 March 2020, as the case may be, shall not be taken into account; or
- has departed on an evacuation flight on or before 31 March 2020, his period of stay in India from 22 March 2020 to his date of departure shall not be taken into account
Relaxation for Financial Year 2020-21: may be issued in the future
Subsequently, the CBDT has issued the attached press release to clarify that as the lockdown continues during the Financial Year 2020-21 and it is not yet clear as to when international flight operations would resume, a circular excluding the period of stay of individuals up to the date of normalisation of international flight operations, for determination of the residential status for Financial Year 2020-21 shall be issued after the said normalisation.