A nonresident will not be considered an Indian resident for income tax purposes because of days present in India as a consequence of COVID-19 travel disruptions, India’s Central Board of Direct Taxes (CBDT) has announced.
The CBDT said in a May 8 circular that nonresidents will not have to consider the days present in India for income tax purposes if they visited India before March 22 and were unable to leave India on or before March 31 because of the pandemic. The circular, intended to alleviate hardships on nonresidents, applies to the 2019-2020 financial year and amends the standard tax residency requirements under section 6 of the Income Tax Act, 1961. An individual is generally considered resident in India if he is present in the country for 182 days or more in a tax year.
Some individuals who intended to return to the United States from a foreign country have been faced with travel restrictions and disruptions, including travel bans, government-mandated lockdowns, and canceled flights. On March 24 Indian Prime Minister Narendra Modi called for a complete lockdown of his nation for 21 days and told people they could not step outside their homes during that period, which has since been extended.
According to the circular, the CBDT received concerns from individuals saying that they visited India during 2019-2020 with the intention of leaving to maintain their nonresident tax status. However, because of the COVID-19 outbreak, they have been unable to leave the country because of the extended lockdown and suspension of international flights.
The circular also covers individuals who were quarantined in India because of COVID-19 on or after March 1 and left India on an evacuation flight on or before March 31. Nonresidents who departed on an evacuation flight on or before March 31 may also discount their days present in India from March 22. The CBDT also said that individuals who were unable to leave India on or before March 31 may discount the days present in India from the beginning of quarantine to the date of departure.