NRIs to retain residency status despite extended India stay due to covid

dubai — Indian Finance minister Nirmala Sitharaman has allowed discounting of prolonged stay period in the country for determining the residency status for Non Resident Indians (NRIs).

The latest circular issued by the Central Board of Direct Taxes (CBDT) said it would exclude the period of stay of such people up to the date of normalisation of international flight operations and their departures from India, while determining the residency status.

The board’s decision will provide relief to people who may have technically become residents as per income tax rules due to travel restrictions and are expected to pay their global income to tax.

Dixit Jain, managing director, The Tax Experts DMCC, said the latest circular has come as massive relaxation to NRIs who went to India and stuck due to the Covid-19 situation.

“Lot of NRIs plan their trip to India in such ways where they don’t exceed 182 days to become resident in India, therefore this will help lot of NRIs as now they will be able to exclude these days and may be able to safeguard themselves from being Resident,” Jain said.

The board’s decision comes after it considered various representations received from people who had to prolong their stay in India due to the lockdown and suspension of international flights.

For fiscal year 2019-20, the board will discount the days from March 22, when international flights were suspended, till March 31 where an individual had not been able to leave India. In case where an individual who has been quarantined in India on or after March 1, and has departed on an evacuation flight on or before March 31, or has been unable to leave India, the period of stay from the beginning of quarantine to the date of departure, or March 31, shall not be taken into account.

In case where an individual has departed on an evacuation flight on or before March 31, his period of stay in India from March 22 till the date of departure shall not be taken into account.