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CBDT prescribed Form-NR to furnish the information by individuals affected by change in residential status due to Covid-19

March 05, 2021
CBDT prescribed Form-NR to furnish the information by individuals affected by change in residential status due to Covid-19

The Central Board of Direct Taxes (CBDT) has issued a circular on March 3, 2021, clarifying that Non Resident individuals facing the issue of double taxation on their income for the Financial Year (FY) 2020-21 due to extended stay in India because of COVID-19 related travel restrictions have to furnish the specific information in the newly notified “Form-NR” by March 31, 2021.

The CBDT has issued circular in response to the various representations requesting for relief in determination of the residential status for FY 2020-21 from individuals who visited to India during FY 2019-20 and remain stranded in India due to suspension of international flights when the nationwide lock down was imposed in the end of March 2020.

There were concerns that the extended stay could lead to these individuals becoming residents in India as per the provisions of the Income Tax Act, 1961 which considers the stay duration for determining residential status and ambit of income (including global income) chargeable to tax in India. Earlier, in May 2020 for the FY 2019-20, CBDT clarified that the period of stay of Non Resident Indians (NRIs) and foreign nationals in India during the lock down period would not be counted for the purpose of determining their residency status for the purposes of taxation.

As per the circular, if any individual is facing the issue of double taxation even after claiming reliefs available in the relevant Double Taxation Avoidance Agreement (Tax Treaty), he/she may furnish the specified information in Form-NR electronically to the Principal Chief Commissioner of Income Tax (International Taxation) by March 31, 2021. The main details required in “Form-NR” includes the nature of income, quantum of double taxed income, reasons of double taxation, stay details in India, current home country, source jurisdiction etc. to evaluate the possible situation in which a particular tax payer is facing double taxation due the forced stay in India.

On the basis of the information received from such individuals, CBDT will consider whether any relaxation is required to be provided or not and if it is required than whether general relaxation can be provided for a class of individuals or specific relaxation is required to be given in individual cases.

Last Updated: 05-03-2021

Article contributed by:

Gaurav Paliwal

Manager – Direct Tax

MBG Corporate Services


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