The finance ministry on May 8 provided some relief to those who have been facing difficulty with the status of their residency in India under section 6 of the Income-Tax Act, 1961 due to lockdown and suspension of international flights.

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Due to the coronavirus pandemic many people are required to prolong their stay in India following the suspension of international flights, such people will be required to file tax returns as Indian residents, many representations seeking discounting were being received by the finance ministry.

Taking cognisance of the representations and the rationale, finance minister Nirmala Sitharaman decided to allow discounting of their prolonged for determining their residency status.

Similar circular will be issued in due course for excluding forced stay in India on for financial year 2020-21.

The finance ministry added that as the lockdown continues during FY 2020-21 and it is not yet clear when international flights would resume, a circular excluding the period of stay of these individuals up to the date of normalisation of international flights, for determination of the residential status for FY20-21 will be issued after flights are resumed.

The Central Board of Direct Taxes (CBDT) issued a circular dated May 8 for the purposes of determining the residential status under section 6 of the I-T Act during the previous year 2019-20 in respect of an individual who has come to India on a visit before March 22, 2020 reads as follows:

(a) Has been unable to leave India on or before 31st March 2020, his period of stay in India from 22ndMarch, 2020 to 31stMarch, 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.

It may be noted that there are 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. However, due to declaration of the lockdown and suspension of international flights owing to outbreak of Novel Corona Virus (COVID-19), they are required to prolong their stay in India. The status of an individual 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 year.

First Published:May 8, 2020 9:39 PM IST