COVID-19: Relaxation on Residential Status under IT Act

The Central Government vide Circular dated May 8, 2020 has provided relaxation on residential status of the individuals under Income-tax Act, 1961

Section 6 of the Income Tax Act deals with the provisions determining the residential status of a person based on his/her stay in India. Any Individual who stays for a period of 182/ 60 days (Subject to other conditions) or more in any year becomes resident of India and liable to become taxable in India.

Due to COVID-19 pandemic, many countries including India has announced lockdown and suspended any kind of travel including international transport.  Because of these situation, many individuals who had come to visit India required to extend their stay in India which make their status as Indian tax resident and qualifies them to pay tax on their global income.

Considering the impact of COVID-19 and various representations received, the Central Board of Direct Taxes (CBDT) exercises its power u/s 119 of the Act and has granted relaxation on residential status under Income Tax Act, 1961 which are as below:

For determining the residential status u/s 6 of the Act during the previous year 2019-20 in respect of an individual who has come on a visit to India before March 22, 2020 and

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

– has been quarantined in India on account of Covid-19 on or after March 1, 2020 and has departed on an evacuation flight on or before March 31, 2020 his period of stay from the beginning of his quarantine to his date of departure shall not be taken into account; or

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

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

Further circular could be issued by CBDT for the exclusion of the period of the stay of such individuals beyond March 31, 2020 due to suspension of the international flights up to the air transportation started by the government for determining their residential status for the previous year 2020-21.

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