The Central Board of Direct taxes (CBDT) has received various representations requesting for relaxation in determination of residential status for 2020-21 fiscal year.
The Finance Ministry on Wednesday said NRIs and foreign nationals stuck in India due to COVID-19 pandemic and facing double taxation can submit the details to the income tax department by March 31.
The Central Board of Direct taxes (CBDT) has received various representations requesting for relaxation in determination of residential status for 2020-21 fiscal year ending March 31 from individuals who had come on a visit to India during 2019-20 and intended to leave India but could not do so due to suspension of international flights.
In a circular, the CBDT said that if any individual is facing double taxation even after taking into account the relief provided by the relevant Double Taxation Avoidance Agreement (DTAA), he/she may furnish the specified information electronically by 31st March, 2021, to the Principal Chief Commissioner of Income-tax (International Taxation).
The details have to be submitted in a specified form.
Commercial international flights were suspended when the nationwide lockdown was imposed on March 25, 2020. Later, such flights were allowed in a restricted manner under bilateral Air Bubble agreements and the services are yet to resume fully. As a result, many NRIs and foreign nationals had to prolong their stay in India.
There were apprehensions that this extended stay could lead to these individuals becoming Indian residents as per Section 6 of the Income Tax Act for taxation purposes.
For 2019-20 fiscal, which ended on March 31, 2020, the Ministry in May clarified that the period of stay of non-resident Indians and foreign nationals in India during the lockdown period would not be counted for the purpose of determining their residency status for the purpose of taxation.