Covid-19 update: Govt’s residential status move relieves tax worries, ‘genuine hardships’ of NRIs

The Central Board of Direct Taxes (CBDT) decided to grant relief to individuals stranded in the country amid the Covid-19 crisis “in order to avoid genuine hardship in such cases,” the circular issued by the Ministry of Finance read.

The central government on Saturday issued a press release on the status of residency of NRIs/foreign visitors whose stay in India got extended due to the coronavirus lockdown.

People were concerned that after the lapse of their period of stay in the country, amid the coronavirus lockdown, they will be required file tax returns as Indian residents. (Reuters)

The statement came after the Ministry of Finance on Friday announced that all those Non-Resident Indians (NRIs) and foreign visitors whose stay in the country got extended amid the Covid-19 crisis will get relief under section 6 of the Income-tax Act, 1961 which contains provisions relating to the residency of a person.

The ministry said the move has been taken after receiving representations “stating that there are a number of individuals who had come on a visit to India during the previous year 2019-20 for a particular duration and intended to leave India before the end of the previous year for maintaining their status as non-resident or not ordinary resident in India”.

Such people were concerned that after the lapse of their period of stay in the country, amid the coronavirus lockdown, they will be required file tax returns as Indian residents.

The Central Board of Direct Taxes (CBDT), therefore, decided to grant relief to such individuals stranded in the country amid the Covid-19 crisis, “in order to avoid genuine hardship in such cases,” the circular issued earlier today read.

The CBDT has decided vide circular no 11 dated May 8, 2020, that for the purposes of determining the residential status under section 6 of the Act during the previous year 2019-20 in respect of an individual who has come to India on a visit before 22nd March, 2020 and:

(a) has been unable to leave India on or before 31st March 2020, his period of stay in India from 22nd March, 2020 to 31st March, 2020 shall not be taken into account; or

(b) has been quarantined in India on account of Novel Corona Virus (Covid-19) on or after 1st March, 2020 and has departed on an evacuation flight on or before 31st March, 2020 or has been unable to leave India on or before 31st March, 2020, his period of stay from the beginning of his quarantine to his date of departure or 31st March, 2020, as the case may be, shall not be taken into account; or

(c) has departed on an evacuation flight on or before 31st March, 2020, his period of stay in India from 22nd March, 2020 to his date of departure shall not be taken into account.

The notification also stated that the government will issue another circulation, at a later date, excluding the period of stay of these individuals up to the date of normalisation of international flight operations to determine their residential status for the previous year 2020-21

“The lockdown continues during the Financial Year 2020-21 and it is not yet clear as to when international flight operations would resume,” the release stated.