Stranded won’t lose NRI status, don’t need to file returns in India: Govt

Indians living abroad are not treated as a resident for tax purposes by I-T Department provided they spend less than 120 days in India

NEW DELHI: Union Finance minister Nirmala Sitharaman on Friday ordered the Income-tax department to make an exception for Non-resident Indians who are stuck in India due to the COVID-19 and suspension of international flights.

Indians living abroad are not treated as a resident for tax purposes by the Income-tax department provided they spend less than 120 days in India.

But there were many NRIS who have had to extend their stay in India due to the COVID-19 lockdown, some have breached the 120-day limit and many others face the prospect of doing so over the next few days.

A Finance ministry official said the minister had received many representations from people who have had to prolong their stay due to the suspension of international flights, worried that they would have to file tax returns as Indian residents. In order to help such people, the official said Sitharaman had allowed them to discount the extended stay to determine their residence status.

The Finance ministry said since it was not clear when the NRIS would be able to fly out, the Central Board of Direct Taxes had issued orders that this extended stay in India would not be counted to determine their residential status for the financial year 2020-21. The exact dates which shall be excluded shall be issued after international flights resume.

The exception applies to individuals who came to India before March 22 and had been unable to leave the country on or before March 31, 2020. It will also benefit NRIS who had been quarantined in India after March 1 on account of COVID-19. This discounted calculation of dates shall be extended to NRIS whether they had left the country in an evacuation flight or were still in the country.