Amidst the chaos of the coronavirus pandemic, the situation is tense in most of the countries where millions have lost their jobs with no essential services available for residents in many countries worldwide. Not to mention, the number of Corona cases are rising exponentially even in developed countries like the US and numerous countries in Europe and Asia, the coronavirus has caused an uproar in the masses. With authorities urging masses to stay indoors; many transportation services came to a standstill. On the other hand, people residing in foreign countries are eager to return to their home countries safely to avoid further severe conditions in regard to the present lockdown circumstances. The Indian government has made preparations to bring back around 45,000 citizens living in foreign countries.
The Central Board of Direct Taxes (CBDT) has issued a clarification for relaxing the conditions for the residency rule with the intent to help NRIs and foreign visitors. This offers a sigh of relief to the NRIs (Non-resident Indians) and foreign visitors who were unable to reach their home country due to coronavirus pandemic.
For the purpose of determining the residential status under 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.
Does this mean that they are entirely out of the woods? Well, not quite. Despite the newly introduced relaxations, these individuals still have to evaluate their residential status for the financial year (FY) of 2020 and determine their tax liability to India accordingly. The current relaxation is applicable only for the FY 2019-20, and the excluded period is only till 31st March. With the ensuing uncertainty of the lockdown, a similar clarification is expected to be released for the FY 2020-21 as well.
