The nationwide lockdown since March 25 and cancellation of worldwide flights to include the unfold of COVID-19 has compelled non-resident Indians (NRI) and overseas nationals to lengthen their keep in India.
There have been apprehensions that this prolonged keep may result in these people changing into Indian residents as per Part 6 of the Revenue Tax Act.
“Contemplating varied representations acquired from individuals who needed to lengthen their keep in India resulting from lockdown and suspension of worldwide flights, expressing considerations that they are going to be required to file tax returns as Indian residents, finance minister Nirmala Sitharaman immediately allowed discounting of extended keep interval in India for the aim of figuring out residency standing,” an official assertion mentioned.
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The ministry additional said that because the lockdown continues through the monetary yr 2020-21 and it isn’t but clear as to when worldwide flight operations would resume, a round excluding the interval of keep of those people as much as the date of normalisation of worldwide flight operations, for dedication of the residential standing for the monetary yr 2020-21 shall be issued after flights are resumed.
In a round, the Central Board of Direct Taxes (CBDT) mentioned with the intention to keep away from real hardship in such circumstances, for the needs of figuring out the residential standing for 2019-20 of a person who has come to India on a go to earlier than March 22, 2020, and has been unable to depart India on or earlier than March 31, 2020, his interval of keep in India from March 22 to March 31, 2020, shall not be taken under consideration.
In circumstances the place such people have been quarantined in India resulting from COVID-19 on or after March 1, 2020 and has departed on an evacuation flight on or earlier than March 31, 2020 or has been unable to depart India on or earlier than March 31, 2020, his interval of keep from the start of his quarantine to his date of departure or March 31, 2020, because the case could also be, shall not be taken under consideration for figuring out residency standing.
The place the person has departed on an evacuation flight on or earlier than March 31, 2020, his interval of keep in India from March 22, 2020 to his date of departure shall not be taken under consideration.
The standing of a person whether or not he’s resident in India or a non-resident or not ordinarily resident, relies, inter-alia, on the interval for which the particular person is in India throughout a yr.
As per I-T legal guidelines, for 2019-20 fiscal, people staying in India for 182 days or extra in a fiscal or 60 days or extra in a fiscal and not less than 365 days previously four fiscals might be thought of as resident of India for taxation objective and accordingly his/her international revenue turns into taxable.
“This can be a a lot welcome and awaited round, which takes cognizance of considerations of NRIs and different foreigners who arrived in India earlier than March 22, 2020, however couldn’t return on account of imposition of lockdown and suspension of worldwide flights,” Nangia Andersen Consulting Director Shailesh Kumar mentioned.
“Presently, this round takes care of residential standing just for FY 2019-20 and thus excluded interval until March 31, 2020 solely. One might count on an identical round for FY 2020-21, offering exclusion of lockdown interval for FY 2020-21 as nicely for figuring out the residential standing,” he added.