Advocate Sushila
GOVERNMENT CLARIFICATION ABOUT RESIDENTIAL STATUS OF NON-RESIDENT INDIANS DURING COVID-19 CRISIS
Advocate Sushila Ram 11 May 2020

GOVERNMENT CLARIFICATION ABOUT RESIDENTIAL STATUS OF NON-RESIDENT INDIANS DURING COVID-19 CRISIS

The Government of India has recently issued a clarification vide #Circular dated 08-05-2020, about the residential status of a non-resident Indian (#NRI) staying in India during the #Covid19 crisis.

The #IncomeTax Act 1961 as amended thereof (the Act) contains provisions to determine the status of a person residing in India, i.e. whether he is an Indian #resident or an NRI. Section 6 of the Act provides that an individual can be said to be a resident of India, if he has stayed in India, for 182 days or more in a particular year, or if he has stayed in India for at least 365 days in all the preceding 4 years and for a period of 60 days in each such year (#ResidentialPeriod). Thus, an individual who has stayed in India, for a period less than the Residential Period, would be considered as an NRI.

But in the wake of Covid-19 crisis, the Government of India had declared a nation-wide #Lockdown, around 22-03-2020. As a result, the Government imposed restrictions on domestic and international travel. Thus, in view of the Lockdown and travel restrictions, people, who had come on a visit to India, have had to stay back for a prolonged period. As a result, they were at risk of losing their NRI status, as Section 6 states that an individual who stays in India for a period more than the Residential Period, shall lose his NRI status.

Thus, the Central Board of Direct Taxes (#CBDT) issued the Circular dated 08-05-2020 to clarify the residential status of the following categories of individuals, who had to stay back in India due to the Lockdown and travel restrictions:

1- If the individual had come to India on a visit before 22-03-2020, but has not been able to leave India, on or before 31-03-2020:

In such a case, the period of his stay in India from 22-03-2020 to 31-03-2020, would not be taken into account for computing the number of days of his stay in India. This would ensure that he does not lose his NRI status, as Section 6 states that an individual who stays in India for a period more than the Residential Period, shall lose his NRI status; or

2- If the individual had come to India on a visit before 22-03-2020, but has been quarantined in India on account of Covid-19, on or after 01-03-2020:

i) In such a case, if he has departed on an evacuation flight on or before 31-03-2020, then his period of stay from the beginning of his #quarantine to his date of departure, would not be taken into account for computing the number of days of his stay in India. This would ensure that he does not lose his NRI status; or

ii) If he has been unable to leave India on or before 31-03-2020, then the period of his stay from the beginning of his quarantine to 31-03-2020, would not be taken into account for computing the number of days of his stay in India. This is to make sure that he does not lose his NRI status; or

3- If the individual had come to India on a visit before 22-03-2020, but has departed on an evacuation flight on or before 31-03-2020:

In such a case, the period of his stay in India from 22-03-2020 to his date of departure, would not be taken into account for computing the number of days of his stay in India. This is to ensure that he does not lose his NRI status.

Further, in view of the extended Lockdown situation and travel restrictions, the Government has planned to issue a revised circular to exclude the period of stay of such individuals till the time international flights resume their operations, so that they do not lose their NRI status.

The aforesaid Government measures show the Government’s endeavor to curtail the spread of Novel Coronavirus and to ensure the safety of people residing in India. It has also ensured that Indians who have an NRI status do not lose their status due to overstay in India due to the Lockdown or quarantine that is applicable to the country.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

Edited by

Sushila Ram Varma

Chief Consultant

The Indian Lawyer

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