Amendment in Residency Rules of India

Relief in the provisions for determination of residential status in India considering the impact of COVID-19 The Central Board of Direct Taxes (CBDT) has issued circular to provide relief to individuals (i.e. both foreign and Indian nationals) who had come on a visit to India during Financial Year (FY) 2019-20 for a particular duration and intended to leave India before the end of the FY 2019-20 for maintaining their residential status of Non-resident (NR) and Resident but not ordinarily resident (RNOR) in India but due to nationwide lockdown and the suspension of international flights, stranded in India due to which their residential status may change on account of their stay in India exceeding the threshold limits for the determination of the residential status. The residential status of an individual for income tax purposes depends upon the number of days of stay of the individual in India during the financial year. The individuals staying in India for (i) 182 days or more in a financial year or (ii) 60 days or more in a financial year and 365 days or more in the last 4 financial years immediately preceding the relevant financial year will be considered as resident of India for the income tax purposes. In this regard following relief is provided to individuals in the determination of their residential status:

• In the case, individual has come to India on a visit before 22 March 2020 and has been unable to leave India on or before 31 March 2020, his period of stay in India from March 22 to March 31, 2020, shall not be taken into account for determining the residential status of FY 2019-20.
• In the case, individual has come to India on a visit before 22 March 2020 and has been quarantined in India due to COVID-19 on or after 1 March 2020 and has departed on an evacuation flight on or before 31 March 2020 or has been unable to leave India on or before 31 March 2020, his period of stay from the beginning of his quarantine to his date of departure or 31 March 2020, as the case may be, shall not be taken into account for determining the residential status of FY 2019-20.
• In the case, individual has come to India on a visit before 22 March 2020 and has departed on an evacuation flight on or before 31 March 2020, his period of stay in India from 22 March 2020 to his date of departure shall not be taken into account for determining the residential status of FY 2019-20.

Further, as the lockdown continues during the FY 2020-21 and it is not sure as on the date when international flight operations would resume, a circular on similar line for determining the residential status in the cases related to FY 2020-21 would be issued in due course, depending upon normalization or resumption of international flights. Last Updated: 10th May 2020 This article is contributed by:  Janardan Singh Associate Director, Taxation  

Tag: Residency in India